10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

⌧ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2021

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                   to

Commission file number 001-34278

BROADWIND, INC.

(Exact name of registrant as specified in its charter)

Delaware	88-0409160
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

3240 S. Central Avenue, Cicero, IL 60804

(Address of principal executive offices)

(708) 780-4800

(Registrant’s telephone number, including area code)

Not applicable

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, $0.001 par value	BWEN	The NASDAQ Capital Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding twelve months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes  ⌧  No  ◻

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding twelve months (or for such shorter period that the registrant was required to submit such files).  Yes  ⌧  No  ◻

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act:

Large accelerated filer ◻	Accelerated filer ◻
Non-accelerated filer ⌧	Smaller reporting company ⌧​
Emerging growth company ◻

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period to comply with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ◻

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes  ◻  No  ⌧

Number of shares of registrant’s common stock, par value $0.001, outstanding as of May 4, 2021: 18,488,971.

BROADWIND, INC. AND SUBSIDIARIES

INDEX

		Page No.
PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements	1
	Condensed Consolidated Balance Sheets	1
	Condensed Consolidated Statements of Operations	2
	Condensed Consolidated Statements of Stockholders’ Equity	3
	Condensed Consolidated Statements of Cash Flows	4
	Notes to Condensed Consolidated Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	24
Item 4.	Controls and Procedures	24
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	25
Item 1A.	Risk Factors	25
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	26
Item 3.	Defaults Upon Senior Securities	26
Item 4.	Mine Safety Disclosures	26
Item 5.	Other Information	26
Item 6.	Exhibits	26
Signatures		28

PART I.       FINANCIAL INFORMATION

Item 1.Financial Statements

BROADWIND, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

(in thousands, except share and per share data)

	March 31,			December 31,
	2021			2020
ASSETS
CURRENT ASSETS:
Cash	$	2,929		$	3,372
Accounts receivable, net		14,326			15,337
Employee retention credit receivable		3,372			—
Contract assets		2,522			2,253
Inventories, net		40,276			26,724
Prepaid expenses and other current assets		2,204			2,909
Total current assets		65,629			50,595
LONG-TERM ASSETS:
Property and equipment, net		44,766			45,195
Operating lease right-of-use assets		19,401			19,321
Intangible assets, net		4,003			4,186
Other assets		422			385
TOTAL ASSETS	$	134,221		$	119,682
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Line of credit and other notes payable	$	5,076		$	1,406
Current portion of finance lease obligations		1,456			1,427
Current portion of operating lease obligations		1,743			1,832
Accounts payable		25,836			18,180
Accrued liabilities		6,731			6,307
Customer deposits		17,055			18,819
Total current liabilities		57,897			47,971
LONG-TERM LIABILITIES:
Long-term debt, net of current maturities		9,380			9,381
Long-term finance lease obligations, net of current portion		1,891			1,996
Long-term operating lease obligations, net of current portion		19,748			19,569
Other		123			104
Total long-term liabilities		31,142			31,050
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS’ EQUITY:
Preferred stock, $0.001 par value; 10,000,000 shares authorized; no shares issued or outstanding		—			—
Common stock, $0.001 par value; 30,000,000 shares authorized; 18,474,170 and 17,211,498 shares issued as of March 31, 2021, and December 31, 2020, respectively		18			17
Treasury stock, at cost, 273,937 shares as of March 31, 2021 and December 31, 2020		(1,842	)		(1,842	)
Additional paid-in capital		390,479			384,749
Accumulated deficit		(343,473	)		(342,263	)
Total stockholders’ equity		45,182			40,661
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	134,221		$	119,682

The accompanying notes are an integral part of these condensed consolidated financial statements.

1

BROADWIND, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

(in thousands, except per share data)

	Three Months Ended March 31,
	2021			2020
Revenues	$	32,728		$	48,634
Cost of sales		32,446			42,462
Gross profit		282			6,172
OPERATING EXPENSES:
Selling, general and administrative		4,410			4,309
Intangible amortization		183			183
Total operating expenses		4,593			4,492
Operating (loss) income		(4,311	)		1,680
OTHER INCOME (EXPENSE), net:
Interest expense, net		(229	)		(673	)
Other, net		3,362			(1	)
Total other income (expense), net		3,133			(674	)
Net (loss) income before provision for income taxes		(1,178	)		1,006
Provision for income taxes		32			52
NET (LOSS) INCOME		(1,210	)		954
NET (LOSS) INCOME PER COMMON SHARE—BASIC:
Net (loss) income	$	(0.07	)	$	0.06
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING—BASIC		17,178			16,596
NET (LOSS) INCOME PER COMMON SHARE—DILUTED:
Net (loss) income	$	(0.07	)	$	0.06
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING—DILUTED		17,178			16,733

The accompanying notes are an integral part of these condensed consolidated financial statements.

2

BROADWIND, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(UNAUDITED)

(in thousands, except share data)

	Common Stock					Treasury Stock						Additional
	Shares			Issued					Issued			Paid-in			Accumulated
	Issued			Amount		Shares			Amount			Capital			Deficit			Total
BALANCE, December 31, 2019		16,830,930		$	17		(273,937	)	$	(1,842	)	$	383,361		$	(340,776	)	$	40,760
Stock issued for restricted stock		83,050			—		—			—			—			—			—
Share-based compensation		—			—		—			—			308			—			308
Net income		—			—		—			—			—			954			954
BALANCE, March 31, 2020		16,913,980		$	17		(273,937	)	$	(1,842	)	$	383,669		$	(339,822	)	$	42,022
BALANCE, December 31, 2020		17,211,498		$	17		(273,937	)	$	(1,842	)	$	384,749		$	(342,263	)	$	40,661
Stock issued for restricted stock		241,806			—		—			—			—			—			—
Stock issued under defined contribution 401(k) retirement savings plan		26,265			—		—			—			258			—			258
Share-based compensation		—			—		—			—			219			—			219
Shares withheld for taxes in connection with issuance of restricted stock		(105,399	)		—		—			—			(847	)		—			(847	)
Sale of common stock, net		1,100,000			1		—			—			6,100			—			6,101
Net loss		—			—		—			—			—			(1,210	)		(1,210	)
BALANCE, March 31, 2021		18,474,170		$	18		(273,937	)	$	(1,842	)	$	390,479		$	(343,473	)	$	45,182

The accompanying notes are an integral part of these condensed consolidated financial statements.

3

BROADWIND, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(in thousands)

	Three Months Ended March 31,
	2021			2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income	$	(1,210	)	$	954
Adjustments to reconcile net cash used in operating activities:
Depreciation and amortization expense		1,553			1,612
Deferred income taxes		(5	)		22
Change in fair value of interest rate swap agreements		5			138
Stock-based compensation		219			308
Allowance for doubtful accounts		(218	)		29
Common stock issued under defined contribution 401(k) plan		258			—
Gain on disposal of assets		(23	)		—
Changes in operating assets and liabilities, net of acquisition:
Accounts receivable		1,229			2,037
Employee retention credit receivable		(3,372	)		—
Contract assets		(269	)		—
Inventories		(13,552	)		(8,891	)
Prepaid expenses and other current assets		699			(476	)
Accounts payable		7,591			3,545
Accrued liabilities		419			(657	)
Customer deposits		(1,764	)		305
Other non-current assets and liabilities		3			49
Net cash used in operating activities		(8,437	)		(1,025	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment		(612	)		(670	)
Proceeds from disposals of property and equipment		23			—
Net cash used in investing activities		(589	)		(670	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from line of credit		5,673			51,552
Payments on line of credit		(2,450	)		(49,070	)
Proceeds from long-term debt		595			—
Payments on long-term debt		(150	)		(242	)
Principal payments on finance leases		(339	)		(218	)
Shares withheld for taxes in connection with issuance of restricted stock		(847	)		—
Proceeds from sale of common stock, net		6,101			—
Net cash provided by financing activities		8,583			2,022
NET (DECREASE) INCREASE IN CASH		(443	)		327
CASH beginning of the period		3,372			2,416
CASH end of the period	$	2,929		$	2,743

The accompanying notes are an integral part of these condensed consolidated financial statements.

4

BROADWIND, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(Dollars are presented in thousands, except share, per share and per employee data or unless otherwise stated)

NOTE 1 — BASIS OF PRESENTATION 

The unaudited condensed consolidated financial statements presented herein include the accounts of Broadwind, Inc. (the “Company”) and its wholly-owned subsidiaries Broadwind Heavy Fabrications, Inc. (“Broadwind Heavy Fabrications”), Brad Foote Gear Works, Inc. (“Brad Foote”) and Broadwind Industrial Solutions, LLC (“Broadwind Industrial Solutions”). All intercompany transactions and balances have been eliminated. The financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, the financial statements do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, all adjustments, including normal recurring accruals, considered necessary for a fair presentation have been included.

Operating results for the three months ended March 31, 2021 are not necessarily indicative of the results that may be expected for the twelve months ending December 31, 2021, or any other interim period, which may differ materially due to, among other things, the risk factors set forth in our Annual Report on Form 10-K for the year ended December 31, 2020.

The December 31, 2020 condensed consolidated balance sheet was derived from audited financial statements, but does not include all disclosures required by GAAP. This financial information should be read in conjunction with the consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020. 

There have been no material changes in the Company’s significant accounting policies during the three months ended March 31, 2021 as compared to the significant accounting policies described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020.

Company Description  

Through its subsidiaries, the Company is a precision manufacturer of structures, equipment and components for clean technology and other specialized applications. The Company provides technologically advanced high value products to customers with complex systems and stringent quality standards that operate in energy, mining and infrastructure sectors, primarily in the United States of America (the “U.S.”). The Company’s capabilities include, but are not limited to the following: heavy fabrications, welding, metal rolling, coatings, gear cutting and shaping, heat treatment, assembly, engineering and packaging solutions. The Company’s most significant presence is within the U.S. wind energy industry, which accounted for 63% and 74% of the Company’s revenue during the first three months of 2021 and 2020, respectively. 

Liquidity

The Company typically meets its short term liquidity needs through cash generated from operations, its available cash balances, the Credit Facility (as defined below), equipment financing, and access to the public or private debt and/or equity markets, including the option to raise capital from the sale of our securities under the Form S-3 (as discussed below).

See Note 7, “Debt and Credit Agreements,” of these condensed consolidated financial statements for a complete description of the Credit Facility and the Company’s other debt.

Total debt and finance lease obligations at March 31, 2021 totaled $17,803, which includes current outstanding debt and finance leases totaling $6,532. The current outstanding debt includes $4,468 outstanding under the Company’s revolving line of credit. Long-term debt includes $9,151 of Payroll Protection Program loans (“PPP Loans”), which may be forgiven if the Company meets certain requirements. See Note 7, “Debt and Credit Agreements,” of these condensed consolidated financial statements for a complete description of the PPP Loans. 

5

On August 18, 2020, the Company filed a “shelf” registration statement on Form S-3, which was declared effective by the Securities and Exchange Commission (the “SEC”) on October 13, 2020 (the “Form S-3”) and expires on October 12, 2023. This shelf registration statement, which includes a base prospectus, allows the Company at any time to offer any combination of securities described in the prospectus in one or more offerings. Unless otherwise specified in the prospectus supplement accompanying the base prospectus, the Company would use the net proceeds from the sale of any securities offered pursuant to the shelf registration statement for general corporate purposes. 

On March 9, 2021, the Company entered into an Equity Distribution Agreement (the “Equity Distribution Agreement”) with Craig-Hallum Capital Group, LLC (the “Manager”). Pursuant to the terms of the Equity Distribution Agreement, the Company may sell from time to time through the Manager shares of the Company’s common stock, par value $0.001 per share with an aggregate sales price of up to $10,000. The Company will pay a commission to the Manager of 2.75% of the gross proceeds of the sale of the shares sold under the Equity Distribution Agreement and reimburse the Manager for all expenses incident to the performance of its obligations under the Equity Distribution Agreement. During the quarter ended March 31, 2021, the Company issued 1,100,000 shares of the Company’s common stock thereunder. The net proceeds (before upfront costs) to the Company from the sale of such shares were approximately $6,436 after deducting commissions paid of approximately $182 and before deducting other expenses of $335. 

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was signed into law providing numerous tax provisions and other stimulus measures, including an employee retention credit (“ERC”), which is a refundable tax credit against certain employment taxes. The Taxpayer Certainty and Disaster Tax Relief Act of 2020 and the American Rescue Plan Act of 2021 extended and expanded the availability of the ERC. The ERC is available through December 31, 2021 and is equal to 70% of qualified wages (which includes employer qualified health plan expenses) paid to employees. During each quarter in 2021, a maximum of $10,000 in qualified wages for each employee is eligible for the ERC. Therefore, the maximum tax credit that can be claimed by an eligible employer in 2021 is $7,000 per employee per calendar quarter. The Company qualified for the ERC in the first quarter of 2021 because it had a gross receipts decrease of more than 20% from the first quarter of 2019, the relevant criteria for the ERC. As a result of the Company averaging 500 or fewer full-time employees in 2019, all wages paid to employees were eligible for the ERC (rather than just wages paid to employees not providing services). During the three months ended March 31, 2021, the Company recorded a benefit of $3,372 in Other income (expense), net in the Company’s condensed consolidated statement of operations which is included in the line titled Employee retention credit receivable in the Company’s condensed consolidated balance sheet at March 31, 2021. 

The Company anticipates that current cash resources (which includes proceeds from the PPP Loans), expected cash proceeds or savings from the ERC, amounts available under the Credit Facility, cash to be generated from operations and any potential proceeds from the sale of further Company securities under the Form S-3 will be adequate to meet the Company’s liquidity needs for at least the next twelve months.

If assumptions regarding the Company’s production, sales and subsequent collections from certain of the Company’s large customers, as well as customer deposits and revenues generated from new customer orders, are materially inconsistent with management’s expectations, particularly in light of the COVID-19 pandemic and its effects on domestic and global economies, the Company may in the future encounter cash flow and liquidity issues. If the Company’s operational performance deteriorates significantly, it may be unable to comply with existing financial covenants, and could lose access to the Credit Facility. This could limit the Company’s operational flexibility, require a delay in making planned investments and/or require the Company to seek additional equity or debt financing. Any additional equity financing, if available, may be dilutive to stockholders, and additional debt financing, if available, would likely require new financial covenants or impose other restrictions on the Company. While the Company believes that it will continue to have sufficient cash available to operate its businesses and to meet its financial obligations and debt covenants, there can be no assurances that its operations will generate sufficient cash, or that credit facilities will be available in an amount sufficient to enable the Company to meet these financial obligations.

Management’s Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities as of the date of the financial statements and reported amounts of revenues and expenses during the reported period. Significant estimates, among others, include revenue recognition, future cash flows, inventory reserves, warranty reserves, impairment of long-lived assets, allowance for doubtful accounts and health insurance reserves. Although these estimates are based upon management’s best knowledge of current events and actions that the Company may undertake in the future, actual results could differ from these estimates, particularly in light of the COVID-19 pandemic.

NOTE 2 — REVENUES

Revenues are recognized when the promised goods or services are transferred to customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services.

The following table presents the Company’s revenues disaggregated by revenue source for the three months ended March 31, 2021 and 2020:

	Three Months Ended March 31,
	2021			2020
Heavy Fabrications	$	22,777		$	38,368
Gearing		5,349			6,227
Industrial Solutions		4,604			4,039
Eliminations		(2	)		-
Consolidated	$	32,728		$	48,634

6

Revenue within the Company’s Gearing and Industrial Solutions segments, as well as industrial fabrication product line revenues within the Heavy Fabrications segment, are generally recognized at a point in time, typically when the promised goods or services are physically transferred to its customers in an amount that reflects the consideration it expects to be entitled to in exchange for those goods or services. A performance obligation is a promise in a contract to transfer a distinct product or service to the customer. The Company measures revenue based on the consideration specified in the purchase order and revenue is recognized when the performance obligations are satisfied. If applicable, the transaction price of a contract is allocated to each distinct performance obligation and recognized as revenue when or as the customer receives the benefit of the performance obligation.

For tower sales within the Company’s Heavy Fabrications segment, products are sold under terms included in bill and hold sales arrangements that result in different timing for revenue recognition. The Company recognizes revenue under these arrangements only when there is a substantive reason for the agreement, the ordered goods are identified separately as belonging to the customer and not available to fill other orders, the goods are currently ready for physical transfer to the customer, and the Company does not have the ability to use the product or to direct it to another customer. Assuming these required revenue recognition criteria are met, revenue is recognized upon completion of product manufacture and customer acceptance.

During the three months ended March 31, 2021, the Company recognized $172 of revenue within the Gearing segment and $1,153 within the Heavy Fabrications segment over time, as the products had no alternative use to the Company and the Company had an enforceable right to payment, including profit, upon termination of the contracts. Since the projects are labor intensive, the Company uses labor hours as the input measure of progress for the applicable contracts. Contract assets are recorded when performance obligations are satisfied but the Company is not yet entitled to payment. The Company recognized $269 of net contract assets during the first quarter associated with this revenue which represents the Company’s rights to consideration for work completed but not billed at the end of the period. The Company did not recognize any revenue over time during the quarter ended March 31, 2020.

The Company generally expenses sales commissions when incurred. These costs are recorded within selling, general and administrative expenses. Customer deposits, deferred revenue and other receipts are deferred and recognized when the revenue is realized and earned. Cash payments to customers are classified as reductions of revenue in the Company’s statement of operations.

The Company does not disclose the value of the unsatisfied performance obligations for contracts with an original expected length of one year or less.

NOTE 3 — EARNINGS PER SHARE 

The following table presents a reconciliation of basic and diluted earnings per share for the three months ended March 31, 2021 and 2020, as follows: 

	Three Months Ended
	March 31,
	2021			2020
Basic earnings per share calculation:
Net (loss) income	$	(1,210	)	$	954
Weighted average number of common shares outstanding		17,178,136			16,596,236
Basic net (loss) income per share	$	(0.07	)	$	0.06
Diluted earnings per share calculation:
Net (loss) income	$	(1,210	)	$	954
Weighted average number of common shares outstanding		17,178,136			16,596,236
Common stock equivalents:
Non-vested stock awards (1)		—			137,038
Weighted average number of common shares outstanding		17,178,136			16,733,274
Diluted net (loss) income per share	$	(0.07	)	$	0.06

(1) Restricted stock units granted and outstanding of 1,171,093 as of March 31, 2021, are excluded from the computation of diluted earnings due to the anti-dilutive effect as a result of the Company’s net loss for the three months ended March 31, 2021.

7

NOTE 4 — INVENTORIES 

The components of inventories as of March 31, 2021 and December 31, 2020 are summarized as follows:

	March 31,			December 31,
	2021			2020
Raw materials	$	25,406		$	14,586
Work-in-process		14,272			12,634
Finished goods		2,843			2,704
		42,521			29,924
Less: Reserve for excess and obsolete inventory		(2,245	)		(3,200	)
Net inventories	$	40,276		$	26,724

NOTE 5 — INTANGIBLE ASSETS

Intangible assets represent the fair value assigned to definite-lived assets such as trade names and customer relationships as part of the Company’s acquisition of Brad Foote completed in 2007 as well as the noncompetition agreements, trade names and customer relationships that were part of the Company’s acquisition of Red Wolf Company, LLC completed in 2017. Intangible assets are amortized on a straight-line basis over their estimated useful lives, with a remaining life range from 2 to 7 years.

As of March 31, 2021 and December 31, 2020, the cost basis, accumulated amortization and net book value of intangible assets were as follows:

	March 31, 2021												December 31, 2020
											Remaining												Remaining
											Weighted												Weighted
						Accumulated			Net		Average							Accumulated			Net		Average
	Cost		Accumulated			Impairment			Book		Amortization				Accumulated			Impairment			Book		Amortization
	Basis		Amortization			Charges			Value		Period		Cost		Amortization			Charges			Value		Period
Intangible assets:
Noncompete agreements	$	170	$	(118	)	$	—		$	52		1.8	$	170	$	(111	)	$	—		$	59		2.1
Customer relationships		15,979		(7,055	)		(7,592	)		1,332		4.7		15,979		(6,979	)		(7,592	)		1,408		4.9
Trade names		9,099		(6,480	)		—			2,619		6.5		9,099		(6,380	)		—			2,719		6.8
Intangible assets	$	25,248	$	(13,653	)	$	(7,592	)	$	4,003		4.4	$	25,248	$	(13,470	)	$	(7,592	)	$	4,186		4.6

As of March 31, 2021, estimated future amortization expense was as follows:

2021	$	550
2022		725
2023		664
2024		661
2025		661
2026 and thereafter		742
Total	$	4,003

NOTE 6 — ACCRUED LIABILITIES

Accrued liabilities as of March 31, 2021 and December 31, 2020 consisted of the following: 

	March 31,		December 31,
	2021		2020
Accrued payroll and benefits	$	5,296	$	5,320
Fair value of interest rate swap		118		148
Accrued property taxes		186		—
Income taxes payable		115		78
Accrued professional fees		505		176
Accrued warranty liability		40		33
Self-insured workers compensation reserve		140		74
Accrued other		331		478
Total accrued liabilities	$	6,731	$	6,307

8

NOTE 7 — DEBT AND CREDIT AGREEMENTS

The Company’s outstanding debt balances as of March 31, 2021 and December 31, 2020 consisted of the following:

	March 31,			December 31,
	2021			2020
Line of credit	$	4,468		$	1,245
PPP Loans		9,151			9,151
Other notes payable		609			163
Long-term debt		228			228
Less: Current portion		(5,076	)		(1,406	)
Long-term debt, net of current maturities	$	9,380		$	9,381

Credit Facility

On October 26, 2016, the Company established a three-year secured revolving line of credit with CIBC Bank USA (“CIBC”). This line of credit has been amended from time to time. On February 25, 2019, the line of credit was expanded and extended for three years when the Company and its subsidiaries entered into an Amended and Restated Loan and Security Agreement (the “2016 Amended and Restated Loan Agreement”), with CIBC as administrative agent and sole lead arranger and the other financial institutions party thereto, providing the Company and its subsidiaries with a $35,000 secured credit facility (as amended to date, the “Credit Facility”). The obligations under the Credit Facility are secured by, subject to certain exclusions, (i) a first priority security interest in all accounts receivable, inventory, equipment, cash and investment property, and (ii) a mortgage on the Abilene, Texas tower and Pittsburgh, Pennsylvania gearing facilities.

On October 29, 2020, the Company executed the First Amendment to the 2016 Amended and Restated Loan Agreement (the “First Amendment”), implementing a payoff of a syndicated lender and a pricing grid based on the Company’s trailing twelve month EBITDA under which applicable margins range from 2.25% to 2.75% for LIBOR rate loans and 0.00% and 0.75% for base rate loans, and extending the term of the Credit Facility to July 31, 2023.

The Credit Facility is an asset-based revolving credit facility, pursuant to which the CIBC advances funds against a borrowing base consisting of approximately (a) 85% of the face value of eligible receivables of the Company and the subsidiaries, plus (b) the lesser of (i) 50% of the lower of cost or market value of eligible inventory of the Company, (ii) 85% of the orderly liquidation value of eligible inventory and (iii) $12.5 million, plus (c) the lesser of (i) the sum of (A) 75% of the appraised net orderly liquidation value of the Company’s eligible machinery and equipment plus (B) 50% of the fair market value of the Company’s mortgaged property and (ii) $12 million. Subject to certain borrowing base conditions, the aggregate Credit Facility limit under the 2016 Amended and Restated Loan Agreement is $35 million with a sublimit for letters of credit of $10 million. Borrowings under the Credit Facility bear interest at a per annum rate equal to, at the option of the Company, the one, two or three-month LIBOR rate or the base rate, plus a margin. The Company must also pay an unused facility fee equal to 0.50% per annum on the unused portion of the Credit Facility along with other standard fees. With the exception of the balance impacted by the interest rate swap (as described below), the Company is allowed to prepay in whole or in part advances under the Credit Facility without penalty or premium other than customary “breakage” costs with respect to LIBOR loans.

The Credit Facility contains customary representations and warranties applicable to the Company and the subsidiaries. It also contains a requirement that the Company, on a consolidated basis, maintain a minimum quarterly fixed charge coverage ratio, along with other customary restrictive covenants, certain of which are subject to materiality thresholds, baskets and customary exceptions and qualifications. The Company was in compliance with all covenants under the Credit Facility as of March 31, 2021.

On February 23, 2021, the Company executed the Second Amendment to the 2016 Amended and Restated Loan Agreement (the “Second Amendment”) which waived testing of the fixed charge coverage covenant for the quarters ending March 31, 2021 and June 30, 2021, added a new liquidity covenant applicable to the quarter ending March 31, 2021, and new minimum EBITDA covenants applicable to the quarters ending March 31, 2021 and June 30 2021.  

In conjunction with the 2016 Amended and Restated Loan Agreement, during June 2019, the Company entered into a floating to fixed interest rate swap with CIBC. The swap agreement has a notional amount of $6,000 and a schedule matching that of the underlying loan that synthetically fixes the interest rate on LIBOR borrowings for the entire term of the Credit Facility at 2.13%, before considering the Company’s risk premium. The interest rate swap is accounted for using mark-to-market accounting. Accordingly, changes in the fair value of the swap each reporting period are adjusted through earnings, which may subject the Company’s results of operations to non-cash volatility. The interest rate swap liability is included in the “Accrued liabilities” line item of the Company’s condensed consolidated financial statements as of March 31, 2021 and December 31, 2020.

As of March 31, 2021, there was $4,468 of outstanding indebtedness under the Credit Facility, with the ability to borrow an additional $18,640, under the Credit Facility.

9

Other 

In 2016, the Company entered into a $570 loan agreement with the Development Corporation of Abilene which is included in the “Long-term debt, less current maturities” line item of our condensed consolidated financial statements as of March 31, 2021 and December 31, 2020. The loan is forgivable upon the Company meeting and maintaining specific employment thresholds. During each of the years 2020, 2019, and 2018, $114 of the loan was forgiven. As of March 31, 2021, the loan balance was $228. In addition, the Company has outstanding notes payable for capital expenditures in the amount of $609 and $163 as of March 31, 2021 and December 31, 2020, respectively, with $609 and $161 included in the “Line of credit and other notes payable” line item of the Company’s condensed consolidated financial statements as of March 31, 2021 and December 31, 2020, respectively. The notes payable have monthly payments that range from $1 to $36 and an interest rate of approximately 5%. The equipment purchased is utilized as collateral for the notes payable. The outstanding notes payable have maturity dates that range from May 2021 to August 2022.

On April 15, 2020, the Company received funds under notes and related documents with CIBC, under the Paycheck Protection Program (the “PPP”) which was established under the CARES Act enacted on March 27, 2020 in response to the COVID-19 pandemic and is administered by the U.S. Small Business Administration (the “SBA”). The Company received total proceeds of $9,530 from the PPP loans and made repayments of $379 on May 13, 2020. Under the terms of the CARES Act, as amended by the Paycheck Protection Program Flexibility Act of 2020 enacted on June 5, 2020 (the “Flexibility Act”), the PPP Loans, and accrued interest and fees may be forgiven following a period of twenty-four weeks after PPP Loan proceeds are received (the “covered period”) if they are used for qualifying expenses as described in the CARES Act including payroll costs and benefits (which must equal or exceed 60% of the amount requested to be forgiven), rent, mortgage interest, and utilities, which are subject to certain reductions based on the number of full time equivalent employees and the level of compensation for employees during such covered period. The amount of loan forgiveness will be reduced if the borrower terminates employees or significantly reduces salaries during such period, subject to certain exceptions. Subject to the terms and conditions applicable to loans administered by the SBA under the PPP, as amended by the Flexibility Act, the unforgiven portion of a PPP Loan is payable over a two year period at an interest rate of 1.00%, with a deferral of payments of principal, interest and fees until the date on which the SBA remits the loan forgiveness amount to the lender (or notifies the lender that no loan forgiveness is allowed), provided that the borrower applies for forgiveness within 10 months after the last day of the covered period (and if not, payment of principal and interest shall commence 10 months after the last day of the covered period). The Company used at least 60% of the amount of the PPP Loans proceeds to pay for payroll costs and the balance on other eligible qualifying expenses that the Company believes to be consistent with the terms of the PPP and submitted its forgiveness applications to CIBC during the first quarter of 2021. While the Company currently believes that its use of the loan proceeds will meet the conditions for forgiveness of the PPP Loans, the Company cannot provide assurance that it has not taken and will not take actions that could cause the Company to be ineligible for forgiveness of the PPP Loans, in whole or in part.

NOTE 8 — LEASES

The Company leases certain facilities and equipment. On January 1, 2019, the Company adopted ASU 2016-02, Leases (“Topic 842”) and ASU 2018-11 using the cumulative effect method and has elected to apply each available practical expedient. The adoption of Topic 842 resulted in the Company recognizing operating lease liabilities totaling $19,508 with a corresponding right-of-use (“ROU”) asset of $17,613 based on the present value of the minimum rental payments of such leases. The variance between the ROU asset balance and the lease liability is a deferred rent liability that existed prior to the adoption of Topic 842 and was offset against the ROU asset balance during the adoption. The discount rates used for leases accounted for under ASC 842 are based on an interest rate yield curve developed for the leases in the Company’s lease portfolio.

The Company has elected to apply the short-term lease exception to all leases of one year or less. During the three months ended March 31, 2021 and March 31, 2020, the Company had an additional operating lease that resulted in right-of-use assets obtained in exchange for lease obligations of $907 and $4,380, respectively. Additionally, during the three months ended March 31, 2021, the Company had additional finance leases that resulted in property, plant, and equipment obtained in exchange for lease obligations of $263.

Some of the Company’s facility leases include options to renew. The exercise of the renewal options is typically at the Company’s discretion. The Company regularly evaluates the renewal options and includes them in the lease term when the Company is reasonably certain to exercise them.

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Quantitative information regarding the Company’s leases is as follows:

	Three Months Ended March 31,
	2021			2020
Components of lease cost
Finance lease cost components:
Amortization of finance lease assets	$	186		$	129
Interest on finance lease liabilities		68			26
Total finance lease costs		254			155
Operating lease cost components:
Operating lease cost		759			765
Short-term lease cost		196			132
Variable lease cost (1)		230			195
Sublease income		(46	)		(45	)
Total operating lease costs		1,139			1,047
Total lease cost	$	1,393		$	1,202
Supplemental cash flow information related to our operating leases is as follows for the three months ended March 31, 2021 and 2020:
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash outflow from operating leases	$	887			888
Weighted-average remaining lease term-finance leases at end of period (in years)		1.9			1.2
Weighted-average remaining lease term-operating leases at end of period (in years)		9.5			10.5
Weighted-average discount rate-finance leases at end of period		9.0	%		9.2	%
Weighted-average discount rate-operating leases at end of period		8.5	%		8.8	%

(1) Variable lease costs consist primarily of taxes, insurance, utilities, and common area or other maintenance costs for the Company’s leased facilities and equipment.

As of March 31, 2021, future minimum lease payments under finance leases and operating leases were as follows:

	Finance			Operating
	Leases			Leases			Total
2021	$	1,317		$	2,668		$	3,985
2022		1,400			3,474			4,874
2023		732			3,388			4,120
2024		151			2,933			3,084
2025		84			3,015			3,099
2026 and thereafter		—			17,103			17,103
Total lease payments		3,684			32,581			36,265
Less—portion representing interest		(337	)		(11,090	)		(11,427	)
Present value of lease obligations		3,347			21,491			24,838
Less—current portion of lease obligations		(1,456	)		(1,743	)		(3,199	)
Long-term portion of lease obligations	$	1,891		$	19,748		$	21,639

NOTE 9 — FAIR VALUE MEASUREMENTS 

Fair Value of Financial Instruments 

The carrying amounts of the Company’s financial instruments, which include cash, accounts receivable, accounts payable and customer deposits, approximate their respective fair values due to the relatively short-term nature of these instruments. Based upon interest rates currently available to the Company for debt with similar terms, the carrying value of the Company’s long-term debt is approximately equal to its fair value. 

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The Company entered into an interest rate swap in June 2019 to mitigate the exposure to the variability of LIBOR for its floating rate debt described in Note 7, “Debt and Credit Agreements,” of these condensed consolidated financial statements. The fair value of the interest rate swap is reported in “Accrued liabilities” and the change in fair value is reported in “Interest expense, net” of these condensed consolidated financial statements. The fair value of the interest rate swap is estimated as the net present value of projected cash flows based on forward interest rates at the balance sheet date.

The Company is required to provide disclosure and categorize assets and liabilities measured at fair value into one of three different levels depending on the assumptions (i.e., inputs) used in the valuation. Level 1 provides the most reliable measure of fair value while Level 3 generally requires significant management judgment. Financial assets and liabilities are classified in their entirety based on the lowest level of input significant to the fair value measurement. Financial instruments are assessed quarterly to determine the appropriate classification within the fair value hierarchy. Transfers between fair value classifications are made based upon the nature and type of the observable inputs. The fair value hierarchy is defined as follows:

Level 1 — Valuations are based on unadjusted quoted prices in active markets for identical assets or liabilities.

Level 2 — Valuations are based on quoted prices for similar assets or liabilities in active markets, or quoted prices in markets that are not active for which significant inputs are observable, either directly or indirectly. 

Level 3 — Valuations are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. Inputs reflect management’s best estimate of what market participants would use in valuing the asset or liability at the measurement date.

The following tables represent the fair values of the Company’s financial liabilities as of March 31, 2021 and December 31, 2020:

	March 31, 2021
	Level 1		Level 2		Level 3		Total
Liabilities measured on a recurring basis:
Interest rate swap	$	—	$	118	$	—	$	118
Total liabilities at fair value	$	—	$	118	$	—	$	118

	December 31, 2020
	Level 1		Level 2		Level 3		Total
Liabilities measured on a recurring basis:
Interest rate swap	$	—	$	148	$	—	$	148
Total liabilities at fair value	$	—	$	148	$	—	$	148

NOTE 10 — INCOME TAXES 

Effective tax rates differ from federal statutory income tax rates primarily due to changes in the Company’s valuation allowance, permanent differences and provisions for state and local income taxes. As of March 31, 2021, the Company has a full valuation allowance recorded against deferred tax assets. During the three months ended March 31, 2021, the Company recorded a provision for income taxes of $32, compared to a provision for income taxes of $52 during the three months ended March 31, 2020. 

The Company files income tax returns in U.S. federal and state jurisdictions. As of March 31, 2021, open tax years in federal and some state jurisdictions date back to 1996 due to the taxing authorities’ ability to adjust operating loss carryforwards. As of December 31, 2020, the Company had federal and unapportioned state net operating loss (“NOL”) carryforwards of $260,598 of which $227,781 will generally begin to expire in 2026. The majority of the NOL carryforwards will expire in various years from 2028 through 2037. NOLs generated after January 1, 2018 will not expire.

Since the Company has no unrecognized tax benefits, they will not have an impact on the condensed consolidated financial statements as a result of the expiration of the applicable statues of limitations within the next twelve months. In addition, Section 382 of the Internal Revenue Code of 1986, as amended (the “IRC”), generally imposes an annual limitation on the amount of NOL carryforwards and associated built-in losses that may be used to offset taxable income when a corporation has undergone certain changes in stock ownership. The Company’s ability to utilize NOL carryforwards and built-in losses may be limited, under IRC Section 382 or otherwise, by the Company’s issuance of common stock or by other changes in stock ownership. Upon completion of the Company’s analysis of IRC Section 382 in 2010, the Company determined that aggregate changes in stock ownership have triggered an annual limitation on NOL carryforwards and built-in losses available for utilization, thereby currently limiting annual NOL usage to $14,284 per year. Further limitations may occur, depending on additional future changes in stock ownership. To the extent the Company’s use of NOL carryforwards and associated built-in losses is significantly limited in the future, the Company’s income could be subject to U.S. corporate income tax earlier than it would be if the Company were able to use NOL carryforwards and built-in losses without such limitation, which could result in lower profits and the loss of benefits from these attributes. 

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In February 2013, the Company adopted a Stockholder Rights Plan, which was amended and extended in February 2016 and again in February 2019 (as amended, the “Rights Plan”). The Rights Plan is designed to preserve the Company’s substantial tax assets associated with NOL carryforwards under IRC Section 382. The amendment to the Rights Plan was most recently approved by the Company’s stockholders at the Company’s 2019 Annual Meeting of Stockholders and has a term of three years.

The Rights Plan is intended to act as a deterrent to any person or group, together with its affiliates and associates, becoming the beneficial owner of 4.9% or more of the Company’s common stock and thereby triggering a further limitation of the Company’s available NOL carryforwards. In connection with the adoption of the Rights Plan, the Board declared a non-taxable dividend of one preferred share purchase right (a “Right”) for each outstanding share of the Company’s common stock to the Company’s stockholders of record as of the close of business on February 22, 2013. Each Right entitles its holder to purchase from the Company one one-thousandth of a share of the Company’s Series A Junior Participating Preferred Stock at an exercise price of $4.25 per Right, subject to adjustment. As a result of the Rights Plan, any person or group that acquires beneficial ownership of 4.9% or more of the Company’s common stock without the approval of the Board would be subject to significant dilution in the ownership interest of that person or group. Stockholders who owned 4.9% or more of the outstanding shares of the Company’s common stock as of February 12, 2013 will not trigger the preferred share purchase rights unless they acquire additional shares after that date. 

As of March 31, 2021, the Company had no unrecognized tax benefits. The Company recognizes interest and penalties related to uncertain tax positions as income tax expense. The Company had no accrued interest and penalties as of March 31, 2021.

NOTE 11 — SHARE-BASED COMPENSATION 

There was no stock option activity during the three months ended March 31, 2021 and no stock options were outstanding as of March 31, 2021. 

The following table summarizes the Company’s restricted stock unit and performance award activity during the three months ended March 31, 2021: 

				Weighted Average
	Number of			Grant-Date Fair Value
	Shares			Per Share
Unvested as of December 31, 2020		1,332,884		$	1.86
Granted		80,015		$	2.06
Vested		(241,806	)	$	2.14
Unvested as of March 31, 2021		1,171,093		$	1.84

Under certain situations, shares are withheld from issuance to cover taxes for the vesting of restricted stock units and performance awards. For the three months ended March 31, 2021, 105,399 of such shares were withheld to cover $847 of tax obligations. 

The following table summarizes share-based compensation expense included in the Company’s condensed consolidated statements of operations for the three months ended March 31, 2021 and 2020, as follows: 

	Three Months Ended March 31,
	2021		2020
Share-based compensation expense:
Cost of sales	$	26	$	22
Selling, general and administrative		193		286
Net effect of share-based compensation expense on net income	$	219	$	308
Reduction in earnings per share:
Basic earnings per share	$	0.01	$	0.02
Diluted earnings per share	$	0.01	$	0.02

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NOTE 12 — LEGAL PROCEEDINGS

The Company is party to a variety of legal proceedings that arise in the normal course of its business. While the results of these legal proceedings cannot be predicted with certainty, management believes that the final outcome of these proceedings will not have a material adverse effect, individually or in the aggregate, on the Company’s results of operations, financial condition or cash flows. Due to the inherent uncertainty of litigation, there can be no assurance that the resolution of any particular claim or proceeding would not have a material adverse effect on the Company’s results of operations, financial condition or cash flows. It is possible that if one or more of such matters were decided against the Company, the effects could be material to the Company’s results of operations in the period in which the Company would be required to record or adjust the related liability and could also be material to the Company’s financial condition and cash flows in the periods the Company would be required to pay such liability.

NOTE 13 — RECENT ACCOUNTING PRONOUNCEMENTS 

The Company reviews new accounting standards as issued. Although some of the accounting standards issued or effective in the current fiscal year may be applicable to it, the Company believes that none of the new standards have a significant impact on its condensed consolidated financial statements.

NOTE 14— SEGMENT REPORTING 

The Company is organized into reporting segments based on the nature of the products offered and business activities from which it earns revenues and incurs expenses for which discrete financial information is available and regularly reviewed by the Company’s chief operating decision maker.

The Company’s segments and their product and service offerings are summarized below: 

Heavy Fabrications

The Company provides large, complex and precision fabrications to customers in a broad range of industrial markets. The Company’s most significant presence is within the U.S. wind energy industry, although it has diversified into other industrial markets in order to improve capacity utilization, reduce customer concentrations, and reduce exposure to uncertainty related to governmental policies currently impacting the U.S. wind energy industry. Within the U.S. wind energy industry, the Company provides steel towers and adapters primarily to wind turbine manufacturers. Production facilities, located in Manitowoc, Wisconsin and Abilene, Texas, are situated in close proximity to the primary U.S. domestic wind energy and equipment manufacturing hubs. The two facilities have a combined annual tower production capacity of up to approximately 550 towers (1,650 tower sections), sufficient to support turbines generating more than 1,100 megawatts of power. The Company has expanded production capabilities and leveraged manufacturing competencies, including welding, lifting capacity and stringent quality practices, into aftermarket and original equipment manufacturer (“OEM”) components utilized in surface and underground mining, construction, material handling, oil and gas (“O&G”) and other infrastructure markets.

Gearing 

The Company provides gearing and gearboxes to a broad set of customers in diverse markets including; onshore and offshore O&G fracking and drilling, surface and underground mining, wind energy, steel, material handling and other infrastructure markets. The Company has manufactured loose gearing, gearboxes and systems, and provided heat treat services for aftermarket and OEM applications for nearly a century. The Company uses an integrated manufacturing process, which includes machining and finishing processes in Cicero, Illinois, and heat treatment in Neville Island, Pennsylvania.

Industrial Solutions 

The Company provides supply chain solutions, inventory management, kitting and assembly services, primarily serving the combined cycle natural gas turbine market.

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Corporate

“Corporate” includes the assets and selling, general and administrative expenses of the Company’s corporate office. “Eliminations” comprises adjustments to reconcile segment results to consolidated results. 

The accounting policies of the reportable segments are the same as those referenced in Note 1, “Basis of Presentation” of these condensed consolidated financial statements. Summary financial information by reportable segment for the three months ended March 31, 2021 and 2020 is as follows:

	Heavy Fabrications			Gearing			Industrial Solutions			Corporate			Eliminations			Consolidated
For the Three Months Ended March 31, 2021
Revenues from external customers	$	22,777			5,349			4,602			—			—		$	32,728
Intersegment revenues		—			—			2			—			(2	)		—
Net revenues		22,777			5,349			4,604			—			(2	)		32,728
Operating loss		(1,700	)		(989	)		(14	)		(1,608	)		—			(4,311	)
Depreciation and amortization		945			458			106			44			—			1,553
Capital expenditures		563			—			20			29			—			612

	Heavy Fabrications		Gearing			Industrial Solutions		Corporate			Eliminations		Consolidated
For the Three Months Ended March 31, 2020
Revenues from external customers	$	38,368		6,227			4,039		—			—	$	48,634
Operating profit (loss)		3,541		(261	)		192		(1,792	)		—		1,680
Depreciation and amortization		963		512			104		33			—		1,612
Capital expenditures		381		168			120		1			—		670

	Total Assets as of
	March 31,			December 31,
Segments:	2021			2020
Heavy Fabrications	$	55,689		$	40,438
Gearing		43,181			43,319
Industrial Solutions		8,222			10,244
Corporate		227,891			220,428
Eliminations		(200,762	)		(194,747	)
	$	134,221		$	119,682

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NOTE 15 — COMMITMENTS AND CONTINGENCIES 

Environmental Compliance and Remediation Liabilities 

The Company’s operations and products are subject to a variety of environmental laws and regulations in the jurisdictions in which the Company operates and sells products governing, among other things, air emissions, wastewater discharges, the use, handling and disposal of hazardous materials, soil and groundwater contamination, employee health and safety, and product content, performance and packaging. Certain environmental laws may impose the entire cost or a portion of the cost of investigating and cleaning up a contaminated site, regardless of fault, upon any one or more of a number of parties, including the current or previous owners or operators of the site. These environmental laws also impose liability on any person who arranges for the disposal or treatment of hazardous substances at a contaminated site. Third parties may also make claims against owners or operators of sites and users of disposal sites for personal injuries and property damage associated with releases of hazardous substances from those sites. 

Allowance for Doubtful Accounts 

Based upon past experience and judgment, the Company establishes an allowance for doubtful accounts with respect to accounts receivable. The Company’s standard allowance estimation methodology considers a number of factors that, based on its collections experience, the Company believes will have an impact on its credit risk and the collectability of its accounts receivable. These factors include individual customer circumstances, history with the Company, the length of the time period during which the account receivable has been past due and other relevant criteria. 

16

The Company monitors its collections and write-off experience to assess whether or not adjustments to its allowance estimates are necessary. Changes in trends in any of the factors that the Company believes may impact the collectability of its accounts receivable, as noted above, or modifications to its credit standards, collection practices and other related policies may impact the Company’s allowance for doubtful accounts and its financial results. The activity in the accounts receivable allowance liability for the three months ended March 31, 2021 and 2020 consisted of the following: 

	For the Three Months Ended March 31,
	2021			2020
Balance at beginning of period	$	473		$	127
Bad debt expense		5			55
Write-offs		(222	)		(19	)
Other adjustments		(1	)		(7	)
Balance at end of period	$	255		$	156

Collateral 

In select instances, the Company has pledged specific inventory and machinery and equipment assets to serve as collateral on related payable or financing obligations. 

Liquidated Damages 

In certain customer contracts, the Company has agreed to pay liquidated damages in the event of qualifying delivery or production delays. These damages are typically limited to a specific percentage of the value of the product in question and/or are dependent on actual losses sustained by the customer. The Company does not believe that this potential exposure will have a material adverse effect on the Company’s consolidated financial position or results of operations. There was no reserve for liquidated damages as of March 31, 2021 or December 31, 2020. 

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and related notes thereto in Item 1, “Financial Statements,” of this Quarterly Report and the audited consolidated financial statements and related notes and Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in our Annual Report on Form 10-K for the year ended December 31, 2020. The discussion below contains forward-looking statements that are based upon our current expectations and are subject to uncertainty and changes in circumstances including, but not limited to, those identified in “Cautionary Note Regarding Forward-Looking Statements” at the end of Item 2. Actual results may differ materially from these expectations due to inaccurate assumptions and known or unknown risks and uncertainties including those arising as a result of, or amplified by, the COVID-19 pandemic. As used in this Quarterly Report on Form 10-Q, the terms “we,” “us,” “our,” and the “Company” refer to Broadwind, Inc., a Delaware corporation headquartered in Cicero, Illinois, and its subsidiaries. 

(Dollars are presented in thousands except share, per share and per employee data or unless otherwise stated) 

KEY METRICS USED BY MANAGEMENT TO MEASURE PERFORMANCE

In addition to measures of financial performance presented in our consolidated financial statements in accordance with GAAP, we use certain other financial measures to analyze our performance. These non-GAAP financial measures primarily consist of adjusted EBITDA (as defined below) and free cash flow which help us evaluate growth trends, establish budgets, assess operational efficiencies, oversee our overall liquidity, and evaluate our overall financial performance.

Key Financial Measures

	Three Months Ended
	March 31,
	2021			2020
Net revenues	$	32,728		$	48,634
Net (loss) income	$	(1,210	)	$	954
Adjusted EBITDA (1)	$	1,217		$	3,605
Capital expenditures	$	612		$	670
Free cash flow (2)	$	(9,393	)	$	(329	)
Operating working capital (3)	$	11,711		$	8,844
Total debt (4)	$	14,456		$	16,705
Total orders	$	34,214		$	33,809
Backlog at end of period (5)	$	94,400		$	127,401
Book-to-bill (6)		1.0			0.7

(1) We provide non-GAAP adjusted EBITDA (earnings before interest, income taxes, depreciation, amortization, share based compensation and other stock payments, restructuring costs, impairment charges, and other non-cash gains and losses) as supplemental information regarding our business performance. Our management uses adjusted EBITDA when they internally evaluate the performance of our business, review financial trends and make operating and strategic decisions. We believe that this non-GAAP financial measure is useful to investors because it provides a better understanding of our past financial performance and future results, and it allows investors to evaluate our performance using the same methodology and information as used by our management. Our definition of adjusted EBITDA may be different from similar non-GAAP financial measures used by other companies and/or analysts.

(2) We define free cash flow as adjusted EBITDA plus or minus changes in operating working capital less capital expenditures net of any proceeds from disposals of property and equipment. We believe free cash flow is a useful measure for investors because it portrays our ability to generate cash from our business for purposes such as repaying maturing debt and funding future investments.

(3) We define operating working capital as accounts receivable and inventory net of accounts payable and customer deposits.

(4) Total debt at March 31, 2021 includes PPP loans totaling $9,151.

(5) Our backlog at March 31, 2021 is net of revenue recognized over time. 

(6) We define the book-to-bill as the ratio of new orders we received, net of cancellations, to revenue during a period.

The following table reconciles our non-GAAP key financial measures to the most directly comparable GAAP measure:

	Three Months Ended
	March 31,
	2021			2020
Net (loss) income	$	(1,210	)	$	954
Interest expense		229			673
Income tax provision		32			52
Depreciation and amortization		1,553			1,612
Share-based compensation and other stock payments		613			314
Adjusted EBITDA		1,217			3,605
Changes in operating working capital		(6,649	)		(3,264	)
Employee retention credit receivable		(3,372	)		—
Capital expenditures		(612	)		(670	)
Proceeds from disposal of property and equipment		23			—
Free Cash Flow	$	(9,393	)	$	(329	)

18

OUR BUSINESS 

First Quarter Overview 

We booked $34,214 in new orders in the first quarter of 2021, up from $33,809 in the first quarter of 2020. Within our Heavy Fabrication segment, wind tower orders doubled as compared to last year as multiple customers secured 2021 production capacity. Industrial fabrication product line orders within the Heavy Fabrication segment decreased quarter-over-quarter primarily due to weaker industrial demand, which is largely driven by the timing of projects. Industrial Fabrications orders increased on a sequential basis from $3,526 in the fourth quarter of 2020 to $6,680 in the first quarter of 2021, a reflection of recovery in cyclical end markets. Gearing segment orders decreased 20% compared to the first quarter of 2020 primarily due to the timing of aftermarket wind gearing orders, which can fluctuate based on customer order patterns and decreased mining demand. Gearing orders increased on a sequential basis from $5,741 in the fourth quarter of 2020 to $9,921 in the first quarter of 2021, a reflection of recovery in cyclical end markets and an improving commercial environment. Orders within our Industrial Solutions segment decreased by 40% primarily due to the timing of orders associated with new gas turbine projects.

We recognized revenue of $32,728 in the first quarter of 2021, down 33% compared to the first quarter of 2020, primarily due to a decrease in the Heavy Fabrications segment as tower sections sold decreased 46% compared to the prior year quarter. The segment was adversely impacted by continued supply chain disruptions, a temporary shut-down of our Abilene, Texas plant due to a weather-related event, a customer driven project delay and less demand in the current year. Gearing revenue was down $878 from the first quarter of 2020, driven by lower order intake in recent quarters from oil and gas (“O&G”) and mining customers, partially offset by increased revenue from aftermarket wind customers. Industrial Solutions revenue increased $565, representing a 14% increase compared to the prior year quarter, primarily due to the timing of new gas turbine customer installations.

We reported a net loss of $1,210 or $0.07 per share in the first quarter of 2021, compared to net income of $954 or $0.06 per share in the first quarter of 2020 primarily due to lower sales, supply chain disruptions, manufacturing inefficiencies associated with lower activity levels and the temporary shut-down of our Abilene, Texas Heavy Fabrications plant due to a weather-related event. This was partially offset by a $3,372 employee retention credit (described below) that has been recognized in Other Income (expense), net in our condensed consolidated statement of operations for the three months ended March 31, 2021. 

On March 27, 2020, the CARES Act was signed into law providing numerous tax provisions and other stimulus measures, including the Employee Retention Credit (“ERC”), which is a refundable tax credit against certain employment taxes. The Taxpayer Certainty and Disaster Tax Relief Act of 2020 and the American Rescue Plan Act of 2021 extended and expanded the availability of the ERC. The ERC is available through December 31, 2021 and is equal to 70% of qualified wages (which includes employer qualified health plan expenses) paid to employees. During each quarter in 2021, a maximum of $10,000 in qualified wages for each employee is eligible for the ERC. Therefore, the maximum tax credit that can be claimed by an eligible employer in 2021 is $7,000 per employee per calendar quarter. We qualified for the ERC in the first quarter of 2021 because we had a gross receipts decrease of more than 20% from the first quarter of 2019, the relevant criteria for the ERC. As a result of us averaging 500 or fewer full-time employees in 2019, all wages paid to employees were eligible for the ERC (rather than just wages paid to employees not providing services). During the three months ended March 31, 2021, we recorded a benefit of $3,372 in Other income (expense), net in our condensed consolidated statement of operations which is included in the line titled Employee retention credit receivable in our condensed consolidated balance sheet at March 31, 2021. 

COVID-19 Pandemic

In March 2020, the World Health Organization recognized a novel strain of coronavirus (COVID-19) as a pandemic. In response to this pandemic, the United States and various foreign, state and local governments have, among other actions, imposed travel and business restrictions and required or advised communities in which we do business to adopt stay-at-home orders and social distancing guidelines, causing some businesses to adjust, reduce or suspend operating activities. The pandemic and the various governments’ response have caused significant and widespread uncertainty, volatility and disruptions in the U.S. and global economies, including in the regions in which we operate. 

Overall, through March 31, 2021, we have experienced an adverse impact to our business, operations and financial results as a result of this pandemic due in part to the decline in order activity levels for Gearing and Heavy Fabrications. Additionally, in the first quarter of 2021, we continued to incur manufacturing inefficiencies associated with supply chain disruptions and realized employee staffing constraints due to the spread of the COVID-19 pandemic. 

Our facilities have continued operations as essential businesses in light of the customers and markets served. In response to the pandemic, we continue to right-size our workforce and delay certain capital expenditures. In future periods, we may experience weaker customer demand, requests for extended payment terms, customer bankruptcies, additional supply chain disruption, employee staffing constraints and difficulties, government restrictions or other factors that could negatively impact the Company and its business, operations and financial results. As we cannot predict the duration or scope of the pandemic or its impact on economic and financial markets, any negative impact to our results cannot be reasonably estimated, but it could be material.

We continue to monitor closely the Company’s financial health and liquidity and the impact of the pandemic on the Company. We have been able to serve the needs of our customers while taking steps to protect the health and safety of our employees, customers, partners, and communities. Among these steps, we have followed the guidance provided by the U.S. Centers for Disease Control and Prevention to protect the continued safety and welfare of our employees.

19

RESULTS OF OPERATIONS 

Three months ended March 31, 2021, Compared to Three months ended March 31, 2020 

The condensed consolidated statement of operations table below should be read in connection with a review of the following discussion of our results of operations for the three months ended March 31, 2021, compared to the three months ended March 31, 2020.

	Three Months Ended March 31,												2021 vs. 2020
				% of Total						% of Total
	2021			Revenue			2020			Revenue			$ Change			% Change
Revenues	$	32,728			100.0	%	$	48,634			100.0	%	$	(15,906	)		(32.7	)%
Cost of sales		32,446			99.1	%		42,462			87.3	%		(10,016	)		(23.6	)%
Gross profit		282			0.9	%		6,172			12.7	%		(5,890	)		(95.4	)%
Operating expenses
Selling, general and administrative expenses		4,410			13.5	%		4,309			8.9	%		101			2.3	%
Intangible amortization		183			0.6	%		183			0.4	%		—			0.0	%
Total operating expenses		4,593			14.0	%		4,492			9.2	%		101			2.2	%
Operating (loss) income		(4,311	)		(13.2	)%		1,680			3.5	%		(5,991	)		(356.6	)%
Other income (expense), net
Interest expense, net		(229	)		(0.7	)%		(673	)		(1.4	)%		444			66.0	%
Other, net		3,362			10.3	%		(1	)		(0.0	)%		3,363			336300.0	%
Total other income (expense), net		3,133			9.6	%		(674	)		(1.4	)%		3,807			564.8	%
Net (loss) income before provision for income taxes		(1,178	)		(3.6	)%		1,006			2.1	%		(2,184	)		(217.1	)%
Provision for income taxes		32			0.1	%		52			0.1	%		(20	)		(38.5	)%
Net (loss) income	$	(1,210	)		(3.7	)%	$	954			2.0	%	$	(2,164	)		(226.8	)%

Consolidated 

Revenues decreased by $15,906, primarily due to a 46% decrease in tower sections sold compared to the first quarter of 2020. Heavy Fabrications was adversely impacted by continued supply chain disruptions, the temporary shut-down of our Abilene, Texas plant due to a weather-related event, a customer driven project delay and lower demand in the current year.  Gearing revenue was down $878 from the first quarter of 2020, primarily driven by lower order intake in recent quarters from O&G and mining customers, partially offset by increased revenue from aftermarket wind customers. Industrial Solutions revenue increased $565, representing a 14% increase compared to the prior year quarter, primarily due to the timing of new gas turbine customer installations.

Gross profit decreased by $5,890 primarily due to lower sales, a less profitable customer mix, increased manufacturing inefficiencies associated with lower volumes, the temporary shut-down of our Abilene, Texas Heavy Fabrications plant and continued supply chain disruptions. As a result, gross margin decreased to 0.9% during the three months ended March 31, 2021, from 12.7% during the three months ended March 31, 2020.

Due to lower revenue levels, operating expenses as a percentage of sales increased to 14.0% in the current-year quarter from 9.2% in the prior year quarter.

Net loss was $1,210 during the three months ended March 31, 2021, compared to net income of $954 during the three months ended March 31, 2020 due to the factors described above, partially offset by the $3,372 employee retention credit recognized in Other Income (expense), net in our condensed consolidated statements of operations.

Heavy Fabrications Segment 

	Three Months Ended
	March 31,
	2021			2020
Orders	$	20,797		$	15,514
Tower sections sold		169			312
Revenues		22,777			38,368
Operating (loss) income		(1,700	)		3,541
Operating margin		(7.5	)%		9.2	%

Heavy Fabrications segment wind tower orders doubled compared to last year, as multiple customers secured 2021 production capacity. Industrial fabrication product line orders within the Heavy Fabrication segment decreased quarter-over-quarter primarily due to weaker industrial demand, which is largely driven by the timing of projects. Segment revenues decreased by $15,591 due to a 46% decrease in tower sections sold. The segment was negatively impacted by continued supply chain disruptions, a temporary shut-down of our Abilene, Texas plant due to a weather-related event, a customer driven project delay and lower demand in the current year. 

20

Heavy Fabrications segment operating results decreased by $5,241 compared to the prior year. The quarter-over-quarter degradation in operating performance reflects the adverse volume impacts described previously. Operating margin was (7.5)% during the three months ended March 31, 2021, a decrease from 9.2% during the three months ended March 31, 2020.

Gearing Segment

	Three Months Ended
	March 31,
	2021			2020
Orders	$	9,921		$	12,421
Revenues		5,349			6,227
Operating loss		(989	)		(261	)
Operating margin		(18.5	)%		(4.2	)%

Gearing segment orders decreased 20% primarily due to the timing of aftermarket wind gearing orders, which can fluctuate based on customer order patterns and decreased mining demand, partially offset by increased demand for O&G. Gearing revenue was down 14%, a reflection of lower order intake in recent quarters primarily within the O&G and mining markets, partially offset by increased revenue from aftermarket wind customers.

Gearing segment operating loss increased $728 from the prior year period. This was primarily attributable to lower sales levels and manufacturing inefficiencies associated with the lower activity levels. Operating margin was (18.5)% during the three months ended March 31, 2021, down from (4.2)% during the three months ended March 31, 2020, driven primarily by the items identified above.

Industrial Solutions Segment 

	Three Months Ended
	March 31,
	2021			2020
Orders	$	3,496		$	5,874
Revenues		4,604			4,039
Operating (loss) income		(14	)		192
Operating margin		(0.3	)%		4.8	%

Industrial Solutions segment orders decreased by 40% from the prior year period primarily due to the timing of orders associated with new gas turbine projects. Segment revenue increased by 14% primarily due to the timing of new gas turbine installations. The decrease in operating income versus the prior-year quarter was primarily a result of a lower margin sales mix sold during the quarter. 

Corporate and Other 

Corporate and Other expenses during the three months ended March 31, 2021 decreased from the prior year period due to lower salaries and benefits and a reduction in incentive compensation. 

LIQUIDITY, FINANCIAL POSITION AND CAPITAL RESOURCES 

As of March 31, 2021, cash and cash equivalents totaled $2,929, a decrease of $443 from December 31, 2020. Cash balances remain limited as operating receipts and disbursements flow through our Credit Facility (as defined in Note 7, “Debt and Credit Agreements,” in the notes to our condensed consolidated financial statements), which is in a drawn position. Debt and finance lease obligations at March 31, 2021 totaled $17,803. As of March 31, 2021, we had the ability to borrow up to an additional $18,640 under the Credit Facility. On March 9, 2021, we entered into an Equity Distribution Agreement (the “Equity Distribution Agreement”) with Craig-Hallum Capital Group, LLC (the Manager”). Pursuant to the terms of the Equity Distribution Agreement, we may sell from time to time through the Manager shares of the Company’s common stock, par value $0.001 per share with an aggregate sales price of up to $10,000. The Company will pay a commission to the Manager of 2.75% of the gross proceeds of the sale of the shares sold under the Equity Distribution Agreement and reimburse the Manager for all expenses incident to the performance of its obligations under the Equity Distribution Agreement.

During the quarter ended March 31, 2021, we issued 1,100,000 shares of the Company's common stock thereunder. The net proceeds (before upfront costs) to the Company from the sales of such shares were approximately $6,436 after deducting commissions paid of approximately $182 and before deducting other expense of $335. We anticipate that we will be able to satisfy the cash requirements associated with, among other things, working capital needs, capital expenditures and lease commitments through at least the next twelve months primarily through cash generated from operations, available cash balances, the Credit Facility, additional equipment financing, expected cash proceeds or savings from the ERC, and access to the public or private debt equity markets, including the option to raise capital from the sale of our securities under the Form S-3. 

If assumptions regarding our production, sales and subsequent collections from certain of our large customers, as well as customer deposits and revenues generated from new customer orders, are materially inconsistent with management’s expectations, particularly in light of the COVID-19 pandemic and its effects on domestic and global economies, we may encounter cash flow and liquidity issues.

If our operational performance deteriorates, we may be unable to comply with existing financial covenants, and could lose access to the Credit Facility. This could limit our operational flexibility, require a delay in making planned investments and/or require us to seek additional equity or debt financing. Any attempt to raise equity through the public markets could have a negative effect on our stock price, making an equity raise more difficult or more dilutive. Any additional equity financing or equity linked financing, if available, will be dilutive to stockholders, and additional debt financing, if available, would likely require new financial covenants or impose other operating and financial restrictions on us. While we believe that we will continue to have sufficient cash available to operate our businesses and to meet our financial obligations and debt covenants, there can be no assurances that our operations will generate sufficient cash or that existing or new credit facilities or equity or equity linked financings will be available in an amount sufficient to enable us to meet these financial obligations.

Sources and Uses of Cash 

The following table summarizes our cash flows from operating, investing, and financing activities for the three months ended March 31, 2021 and 2020:

	Three Months Ended
	March 31,
	2021			2020
Total cash (used in) provided by:
Operating activities	$	(8,437	)	$	(1,025	)
Investing activities		(589	)		(670	)
Financing activities		8,583			2,022
Net (decrease) increase in cash	$	(443	)	$	327

21

Operating Cash Flows 

During the three months ended March 31, 2021, net cash used in operating activities totaled $8,437 compared to net cash used in operating activities of $1,025 for the three months ended March 31, 2020. This increase in net cash used was primarily due to our operating performance and an increase in operating working capital in the Heavy Fabrications segment.

Investing Cash Flows 

During the three months ended March 31, 2021, net cash used in investing activities totaled $589, compared to net cash used in investing activities of $670 during the three months ended March 31, 2020. The decrease in net cash used in investing activities as compared to the prior-year period was due to a decrease in net purchases of property and equipment.

Financing Cash Flows 

During the three months ended March 31, 2021, net cash provided by financing activities totaled $8,583, compared to net cash provided by financing activities of $2,022 for the three months ended March 31, 2020. The increase versus the prior-year period was primarily due to proceeds from the sale of securities under the Equity Distribution Agreement received in the current year and increased net borrowings on our Credit Facility in the current year.

Other

In 2016, we entered into a $570 loan agreement with the Development Corporation of Abilene which is included in the “Long-term debt, less current maturities” line item of our condensed consolidated financial statements as of March 31, 2021 and December 31, 2020. The loan is forgivable upon the Company meeting and maintaining specific employment thresholds. During each of the years 2020, 2019 and 2018, $114 of the loan was forgiven. As of March 31, 2021, the loan balance was $228. In addition, we have outstanding notes payable for capital expenditures in the amount of $609 and $163 as of March 31, 2021 and December 31, 2020, respectively, with $609 and $161 included in the “Line of Credit and other notes payable” line item of our condensed consolidated financial statements as of March 31, 2021 and December 31, 2020, respectively. The notes payable have monthly payments that range from $1 to $36 and an interest rate of approximately 5%. The equipment purchased is utilized as collateral for the notes payable. The outstanding notes payable have maturity dates that range from May 2021 to August 2022.

22

On April 15, 2020, we received funds under notes and related documents (“PPP Loans”) with CIBC Bank, USA under the Paycheck Protection Program (the “PPP”) which was established under the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) enacted on March 27, 2020 in response to the COVID-19 pandemic and is administered by the U.S. Small Business Administration (the “SBA”). We received total proceeds of $9,530 from the PPP loans and made repayments of $379 on May 13, 2020. Under the terms of the CARES Act, as amended by the Paycheck Protection Program Flexibility Act of 2020 enacted on June 5, 2020 (the “Flexibility Act”), the PPP Loans, and accrued interest and fees may be forgiven following a period of twenty-four weeks after PPP Loan proceeds are received (the “covered period”) if they are used for qualifying expenses as described in the CARES Act including payroll costs and benefits (which must equal or exceed 60% of the amount requested to be forgiven), rent, mortgage interest, and utilities, which are subject to certain reductions based on the number of full time equivalent employees and the level of compensation for employees during such covered period. The amount of loan forgiveness will be reduced if the borrower terminates employees or significantly reduces salaries during such period, subject to certain exceptions. Subject to the terms and conditions applicable to loans administered by the SBA under the PPP, as amended by the Flexibility Act, the unforgiven portion of a PPP Loan is payable over a two year period at an interest rate of 1.00%, with a deferral of payments of principal, interest and fees until the date on which the SBA remits the loan forgiveness amount to the lender (or notifies the lender that no loan forgiveness is allowed), provided that the borrower applies for forgiveness within 10 months after the last day of the covered period (and if not, payment of principal and interest shall commence 10 months after the last day of the covered period). We used at least 60% of the amount of the PPP Loans proceeds to pay for payroll costs and the balance on other eligible qualifying expenses that we believe to be consistent with the terms of the PPP and submitted our forgiveness applications to CIBC Bank, USA during the first quarter of 2021. While we currently believe that our use of the loan proceeds will meet the conditions for forgiveness of the PPP Loans, we cannot provide assurance that we have not taken and will not take actions that could cause us to be ineligible for forgiveness of the PPP Loans, in whole or in part.

The CARES Act also provided for the ERC, which is a refundable tax credit against certain employment taxes. The Taxpayer Certainty and Disaster Tax Relief Act of 2020 and the American Rescue Plan Act of 2021 extended and expanded the availability of the ERC. The ERC is available through December 31, 2021 and is equal to 70% of qualified wages (which includes employer qualified health plan expenses) paid to employees. During each quarter in 2021, a maximum of $10,000 in qualified wages for each employee is eligible for the ERC. Therefore, the maximum tax credit that can be claimed by an eligible employer in 2021 is $7,000 per employee per calendar quarter. We qualified for the ERC in the first quarter of 2021 because we had a gross receipts decrease of more than 20% from the first quarter of 2019, the relevant criteria for the ERC. As a result of us averaging 500 or fewer full-time employees in 2019, all wages paid to employees were eligible for the ERC (rather than just wages paid to employees not providing services). During the three months ended March 31, 2021, we recorded a benefit of $3,372 in Other income (expense), net in our condensed consolidated statement of operations which is included in the line titled Employee retention credit receivable in our condensed consolidated balance sheet at March 31, 2021. 

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS 

The preceding discussion and analysis should be read in conjunction with our condensed consolidated financial statements and related notes included in Item 1 of Part I of this Quarterly Report on Form 10-Q and the audited consolidated financial statements and related notes and Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in our Annual Report on Form 10-K for the year ended December 31, 2020. Portions of this Quarterly Report on Form 10-Q, including the discussion and analysis in this Part I, Item 2, contain “forward looking statements”, as defined in Section 21E of the Securities Exchange Act of 1934, as amended, (the “Exchange Act”), that reflect our current expectations regarding our future growth, results of operations, financial condition, cash flows, performance, business prospects and opportunities, as well as assumptions made by, and information currently available to, our management. We have tried to identify forward looking statements by using words such as “anticipate,” “believe,” “expect,” “intend,” “will,” “should,” “may,” “plan” and similar expressions, but these words are not the exclusive means of identifying forward looking statements. Forward looking statements include any statement that does not directly relate to a current or historical fact. Our forward-looking statements may include or relate to our beliefs, expectations, plans and/or assumptions with respect to the following, many of which are, and will be, amplified by the COVID-19 pandemic: (i) the impact of global health concerns, including the impact of the current COVID-19 pandemic on the economies and financial markets and the demand for our products; (ii) state, local and federal regulatory frameworks affecting the industries in which we compete, including the wind energy industry, and the related extension, continuation or renewal of federal tax incentives and grants and state renewable portfolio standards as well as new or continuing tariffs on steel or other products imported into the United States; (iii) our customer relationships and our substantial dependency on a few significant customers and our efforts to diversify our customer base and sector focus and leverage relationships across business units; (iv) the economic and operational stability of our significant customers and suppliers, including their respective supply chains, and the ability to source alternative suppliers as necessary, in light of the COVID-19 pandemic; (v) our ability to continue to grow our business organically and through acquisitions, and the impairment thereto by the impact of the COVID-19 pandemic; (vi) the production, sales, collections, customer deposits and revenues generated by new customer orders and our ability to realize the resulting cash flows; (vii) information technology failures, network disruptions, cybersecurity attacks or breaches in data security, including with respect to any remote work arrangements implemented in response to the COVID-19 pandemic; (viii) the sufficiency of our liquidity and alternate sources of funding, if necessary; (ix) our ability to realize revenue from customer orders and backlog; (x) our ability to operate our business efficiently, comply with our debt obligations, manage capital expenditures and costs effectively, and generate cash flow; (xi) the economy, including its stability in light of the COVID-19 pandemic, and the potential impact it may have on our business, including our customers; (xii) the state of the wind energy market and other energy and industrial markets generally and the impact of competition and economic volatility in those markets; (xiii) the effects of market disruptions and regular market volatility, including fluctuations in the price of oil, gas and other commodities; (xiv) competition from new or existing industry participants including, in particular, increased competition from foreign tower manufacturers; (xv) the effects of the change of administrations in the U.S. federal government; (xvi) our ability to successfully integrate and operate acquired companies and to identify, negotiate and execute future acquisitions; (xvii) the potential loss of tax benefits if we experience an “ownership change” under Section 382 of the Internal Revenue Code of 1986, as amended; (xviii) our ability to utilize various relief options enabled by the CARES Act, including our ability to receive forgiveness of the PPP Loans; (xix) the limited trading market for our securities and the volatility of market price for our securities; and (xx) the impact of future sales of our common stock or securities convertible into our common stock on our stock price. These statements are based on information currently available to us and are subject to various risks, uncertainties and other factors that could cause our actual growth, results of operations, financial condition, cash flows, performance, business prospects and opportunities to differ materially from those expressed in, or implied by, these statements including, but not limited to, those set forth under the caption “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2020. We are under no duty to update any of these statements. You should not consider any list of such factors to be an exhaustive statement of all of the risks, uncertainties or other factors that could cause our current beliefs, expectations, plans and/or assumptions to change. Accordingly, forward-looking statements should not be relied upon as a predictor of actual results.

23

Item 3.Quantitative and Qualitative Disclosures About Market Risk 

We are a smaller reporting company as defined by Item 10(f)(1) of Regulation S-K under the Securities Act and as such are not required to provide information under this Item pursuant to Item 305I of Regulation S-K. 

Item 4.Controls and Procedures 

Evaluation of Disclosure Controls and Procedures 

We seek to maintain disclosure controls and procedures (as defined in Rules 13a-15I and 15d-15I under the Exchange Act) that are designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. This information is also accumulated and communicated to management, including our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), as appropriate, to allow timely decisions regarding required disclosure. Our management, under the supervision and with the participation of our CEO and CFO, evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the most recent fiscal quarter reported on herein. Based on that evaluation, our CEO and CFO concluded that our disclosure controls and procedures were effective as of March 31, 2021.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting, including but not limited to changes resulting from the COVID-19 pandemic, during the three months ended March 31, 2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

24

PART II.   OTHER INFORMATION 

Item 1. Legal Proceedings 

The information required by this item is incorporated herein by reference to Note 12, “Legal Proceedings” of the condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q. 

Item 1A. Risk Factors

The Risk Factors identified in our Annual Report on Form 10-K for the year ended December 31, 2020 continue to represent the most significant risks to the Company’s future results of operations and financial conditions, without further modification or amendment. 

25

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None. 

Item 3. Defaults Upon Senior Securities 

None. 

Item 4. Mine Safety Disclosures 

Not Applicable. 

Item 5. Other Information 

None. 

Item 6. Exhibits 

The exhibits listed on the Exhibit Index are filed as part of this Quarterly Report on Form 10-Q.

26

EXHIBIT INDEX

BROADWIND, INC.

FORM 10-Q FOR THE QUARTER ENDED March 31, 2021

Exhibit Number	Exhibit
3.1	Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2008
3.2	Certificate of Amendment to the Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed August 23, 2012)
3.3	Certificate of Amendment to the Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed May 6, 2020)
3.4	Third Amended and Restated Bylaws of the Company, adopted as of May 4, 2020 (incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K filed May 6, 2020)
10.1	Second Amendment to the Amended and Restated Loan and Security Agreement, dated February 23, 2021, among the Company, Brad Foote Gearworks, Inc., Broadwind Services, LLC, Broadwind Heavy Fabrications, Inc., Broadwind Industrial Solutions, LLC, and CIBC Bank USA, as Administrative Agent for itself and all Lenders (incorporated by reference to Exhibit 10.33 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020)
10.2	Equity Distribution Agreement, dated March 9, 2021, by and between the Company and Craig-Hallum Capital Group LLC (incorporated by reference to Exhibit 1.1 to the Company’s Current Report on Form 8-K filed March 9, 2021)
31.1	Rule 13a-14(a) Certification of Chief Executive Officer*
31.2	Rule 13a-14(a) Certification of Chief Financial Officer*
32.1	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, of Chief Executive Officer*
32.2	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, of Chief Financial Officer*
101	The following financial information from this Form 10-Q of Broadwind, Inc. for the quarter ended March 31, 2021, formatted in XBRL (eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Operations, (iii) Condensed Consolidated Statements of Stockholders’ Equity, (iv) Condensed Consolidated Statements of Cash Flows, and (v) Notes to the Condensed Consolidated Financial Statements, tagged as blocks of text.

* Filed herewith.

27

SIGNATURES

In accordance with the requirements of the Securities Exchange Act of 1934, the registrant has caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	BROADWIND, INC.
May 7, 2021	By:	/s/ Eric B. Blashford
		Eric B. Blashford
		President, Chief Executive Officer
		(Principal Executive Officer)
May 7, 2021	By:	/s/ Jason L. Bonfigt
		Jason L. Bonfigt
		Vice President, Chief Financial Officer (Principal Financial Officer)

28

EX-31.1

EXHIBIT 31.1

CERTIFICATION

I, Eric B. Blashford, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Broadwind, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d- 15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of Directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

May 7, 2021
	/s/ Eric B. Blashford
	Eric B. Blashford
	President, Chief Executive Officer
	(Principal Executive Officer)

EX-31.2

EXHIBIT 31.2

CERTIFICATION

I, Jason L. Bonfigt, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Broadwind, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d- 15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of Directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

May 7, 2021
	/s/ Jason L. Bonfigt
	Jason L. Bonfigt
	Vice President, Chief Financial Officer
	(Principal Financial Officer)

EX-32.1

EXHIBIT 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER 

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the quarterly report on Form 10-Q of Broadwind, Inc. (the “Company”) for the period ended March 31, 2021, as filed with the Securities and Exchange Commission (the “Commission”) on the date hereof (the “Report”), I, Eric B. Blashford, President, Chief Executive Officer of the Company, certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (“Section 906”), that:

(i)     the Report fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”); and

(ii)     the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

May 7, 2021
	/s/ Eric B. Blashford
	Eric B. Blashford
	President, Chief Executive Officer
	(Principal Executive Officer)

This certification accompanies the Report pursuant to Section 906 and shall not be deemed filed by the Company for purposes of Section 18 of the Exchange Act.

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Commission or its staff upon request.

EX-32.2

EXHIBIT 32.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the quarterly report on Form 10-Q of Broadwind , Inc. (the “Company”) for the period ended March 31, 2021, as filed with the Securities and Exchange Commission (the “Commission”) on the date hereof (the “Report”), I, Jason L. Bonfigt, Chief Financial Officer of the Company, certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (“Section 906”), that:

(i)     the Report fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as amended; (the “Exchange Act”); and

(ii)     the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

May 7, 2021
	/s/ Jason L. Bonfigt
	Jason L. Bonfigt
	Vice President, Chief Financial Officer
	(Principal Financial Officer)

This certification accompanies the Report pursuant to Section 906 and shall not be deemed filed by the Company for purposes of Section 18 of the Exchange Act.

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Commission or its staff upon request.

XML

Document And Entity Information - shares	3 Months Ended
	Mar. 31, 2021	May 04, 2021
Document Information [Line Items]
Entity Registrant Name	BROADWIND, INC.
Entity Central Index Key	0001120370
Trading Symbol	bwen
Current Fiscal Year End Date	--12-31
Entity Filer Category	Non-accelerated Filer
Entity Current Reporting Status	Yes
Entity Emerging Growth Company	false
Entity Small Business	true
Entity Interactive Data Current	Yes
Entity Common Stock, Shares Outstanding (in shares)		18,488,971
Entity Shell Company	false
Document Type	10-Q
Document Period End Date	Mar. 31, 2021
Document Fiscal Year Focus	2021
Document Fiscal Period Focus	Q1
Amendment Flag	false
Title of 12(b) Security	Common stock, $0.001 par value

XML

Condensed Consolidated Balance Sheets (Current Period Unaudited) - USD ($) $ in Thousands	Mar. 31, 2021	Dec. 31, 2020
CURRENT ASSETS:
Cash	$ 2,929	$ 3,372
Accounts receivable, net	14,326	15,337
Employee retention credit receivable	3,372
Contract assets	2,522	2,253
Inventories, net	40,276	26,724
Prepaid expenses and other current assets	2,204	2,909
Total current assets	65,629	50,595
LONG-TERM ASSETS:
Property and equipment, net	44,766	45,195
Operating lease right-of-use assets	19,401	19,321
Intangible assets, net	4,003	4,186
Other assets	422	385
TOTAL ASSETS	134,221	119,682
CURRENT LIABILITIES:
Line of credit and other notes payable	5,076	1,406
Current portion of finance lease obligations	1,456	1,427
Current portion of operating lease obligations	1,743	1,832
Accounts payable	25,836	18,180
Accrued liabilities	6,731	6,307
Customer deposits	17,055	18,819
Total current liabilities	57,897	47,971
LONG-TERM LIABILITIES:
Long-term debt, net of current maturities	9,380	9,381
Long-term finance lease obligations, net of current portion	1,891	1,996
Long-term operating lease obligations, net of current portion	19,748	19,569
Other	123	104
Total long-term liabilities	31,142	31,050
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS’ EQUITY:
Preferred stock, $0.001 par value; 10,000,000 shares authorized; no shares issued or outstanding
Common stock, $0.001 par value; 30,000,000 shares authorized; 18,474,170 and 17,211,498 shares issued as of March 31, 2021, and December 31, 2020, respectively	18	17
Treasury stock, at cost, 273,937 shares as of March 31, 2021 and December 31, 2020	(1,842)	(1,842)
Additional paid-in capital	390,479	384,749
Accumulated deficit	(343,473)	(342,263)
Total stockholders’ equity	45,182	40,661
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$ 134,221	$ 119,682

XML

Condensed Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) - $ / shares	Mar. 31, 2021	Dec. 31, 2020
Preferred stock, par value (in dollars per share)	$ 0.001	$ 0.001
Preferred stock, shares authorized (in shares)	10,000,000	10,000,000
Preferred stock, shares issued (in shares)	0	0
Preferred stock, shares outstanding (in shares)	0	0
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized (in shares)	30,000,000	30,000,000
Common stock, shares issued (in shares)	18,474,170	17,211,498
Treasury stock, common shares (in shares)	273,937	273,937

XML

Condensed Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Revenues	$ 32,728	$ 48,634
Cost of sales	32,446	42,462
Gross profit	282	6,172
OPERATING EXPENSES:
Selling, general and administrative	4,410	4,309
Intangible amortization	183	183
Total operating expenses	4,593	4,492
Operating (loss) income	(4,311)	1,680
OTHER INCOME (EXPENSE), net:
Interest expense, net	(229)	(673)
Other, net	3,362	(1)
Total other income (expense), net	3,133	(674)
Net (loss) income before provision for income taxes	(1,178)	1,006
Provision for income taxes	32	52
NET (LOSS) INCOME	$ (1,210)	$ 954
NET (LOSS) INCOME PER COMMON SHARE—BASIC:
Net (loss) income (in dollars per share)	$ (0.07)	$ 0.06
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING—BASIC (in shares)	17,178,136	16,596,236
NET (LOSS) INCOME PER COMMON SHARE—DILUTED:
Net (loss) income (in dollars per share)	$ (0.07)	$ 0.06
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING—DILUTED (in shares)	17,178,136	16,733,274

XML

Condensed Consolidated Statements of Stockholders' Equity (Unaudited) - USD ($) $ in Thousands	Common Stock [Member]	Treasury Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	Total
BALANCE (in shares) at Dec. 31, 2019	16,830,930	(273,937)
BALANCE at Dec. 31, 2019	$ 17	$ (1,842)	$ 383,361	$ (340,776)	$ 40,760
Stock issued for restricted stock (in shares)	83,050
Stock issued for restricted stock
Share-based compensation			308		308
Net (loss) income				954	954
BALANCE (in shares) at Mar. 31, 2020	16,913,980	(273,937)
BALANCE at Mar. 31, 2020	$ 17	$ (1,842)	383,669	(339,822)	42,022
BALANCE (in shares) at Dec. 31, 2020	17,211,498	(273,937)
BALANCE at Dec. 31, 2020	$ 17	$ (1,842)	384,749	(342,263)	40,661
Stock issued for restricted stock (in shares)	241,806
Stock issued for restricted stock
Share-based compensation			219		219
Net (loss) income				(1,210)	(1,210)
Stock issued under defined contribution 401(k) retirement savings plan (in shares)	26,265
Stock issued under defined contribution 401(k) retirement savings plan			258		$ 258
Shares withheld for taxes in connection with issuance of restricted stock (in shares)	(105,399)				(105,399)
Shares withheld for taxes in connection with issuance of restricted stock			(847)		$ (847)
Sale of common stock, net (in shares)	1,100,000
Sale of common stock, net	$ 1		6,100		6,101
BALANCE (in shares) at Mar. 31, 2021	18,474,170	(273,937)
BALANCE at Mar. 31, 2021	$ 18	$ (1,842)	$ 390,479	$ (343,473)	$ 45,182

XML

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income	$ (1,210)	$ 954
Adjustments to reconcile net cash used in operating activities:
Depreciation and amortization expense	1,553	1,612
Deferred income taxes	(5)	22
Change in fair value of interest rate swap agreements	5	138
Stock-based compensation	219	308
Allowance for doubtful accounts	(218)	29
Common stock issued under defined contribution 401(k) plan	258
Gain on disposal of assets	(23)
Changes in operating assets and liabilities, net of acquisition:
Accounts receivable	1,229	2,037
Employee retention credit receivable	(3,372)
Contract assets	(269)
Inventories	(13,552)	(8,891)
Prepaid expenses and other current assets	699	(476)
Accounts payable	7,591	3,545
Accrued liabilities	419	(657)
Customer deposits	(1,764)	305
Other non-current assets and liabilities	3	49
Net cash used in operating activities	(8,437)	(1,025)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment	(612)	(670)
Proceeds from disposals of property and equipment	23
Net cash used in investing activities	(589)	(670)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from line of credit	5,673	51,552
Payments on line of credit	(2,450)	(49,070)
Proceeds from long-term debt	595
Payments on long-term debt	(150)	(242)
Principal payments on finance leases	(339)	(218)
Shares withheld for taxes in connection with issuance of restricted stock	(847)
Proceeds from sale of common stock, net	6,101
Net cash provided by financing activities	8,583	2,022
NET (DECREASE) INCREASE IN CASH	(443)	327
CASH beginning of the period	3,372	2,416
CASH end of the period	$ 2,929	$ 2,743

XML

Note 1 - Basis of Presentation

3 Months Ended

Mar. 31, 2021

Notes to Financial Statements

Organization, Consolidation, Basis of Presentation, Business Description and Accounting Policies [Text Block]

NOTE

1

— BASIS OF PRESENTATION

 

The unaudited condensed consolidated financial statements presented herein include the accounts of Broadwind, Inc. (the “Company”) and its wholly-owned subsidiaries Broadwind Heavy Fabrications, Inc. (“Broadwind Heavy Fabrications”), Brad Foote Gear Works, Inc. (“Brad Foote”) and Broadwind Industrial Solutions, LLC (“Broadwind Industrial Solutions”). All intercompany transactions and balances have been eliminated. The financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and in accordance with the instructions to Form

10

-Q and Article

10

of Regulation S-

X.

Accordingly, the financial statements do

not

include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, all adjustments, including normal recurring accruals, considered necessary for a fair presentation have been included.

Operating results for the 

three

months ended

March 31, 2021

are

not

necessarily indicative of the results that

may

be expected for the

twelve

months ending

December 31, 2021,

or any other interim period, which

may

differ materially due to, among other things, the risk factors set forth in our Annual Report on Form

10

-K for the year ended

December 31, 2020

.

The

December 31, 2020

condensed consolidated balance sheet was derived from audited financial statements, but does

not

include all disclosures required by GAAP. This financial information should be read in conjunction with the consolidated financial statements and notes included in the Company's Annual Report on Form

10

-K for the year ended

December 31, 2020

. 

There have been

no

material changes in the Company's significant accounting policies during the 

three

months ended

March 31, 2021

as compared to the significant accounting policies described in the Company's Annual Report on Form

10

-K for the year ended

December 31, 2020

.

Company Description

  

Through its subsidiaries, the Company is a precision manufacturer of structures, equipment and components for clean technology and other specialized applications. The Company provides technologically advanced high value products to customers with complex systems and stringent quality standards that operate in energy, mining and infrastructure sectors, primarily in the United States of America (the “U.S.”). The Company's capabilities include, but are

not

limited to the following: heavy fabrications, welding, metal rolling, coatings, gear cutting and shaping, heat treatment, assembly, engineering and packaging solutions. The Company's most significant presence is within the U.S. wind energy industry, which accounted for

63%

and

74%

of the Company's revenue during the

first

 

three

months of

2021

 and

2020,

respectively. 

Liquidity

The Company meets its short term liquidity needs through cash generated from operations, its available cash balances, the Credit Facility (as defined below), equipment financing, and access to the public or private debt and/or equity markets, including the option to raise capital from the sale of our securities under the Form S-

3

 (as discussed below).

See Note

7,

“Debt and Credit Agreements,” of these condensed consolidated financial statements for a complete description of the Credit Facility and the Company's other debt.

Total debt and finance lease obligations at 

March 31, 2021

totaled

$17,803,

which includes current outstanding debt and finance leases totaling

$6,532.

 The current outstanding debt includes

$4,468

outstanding under the Company's revolving line of credit. Long-term debt includes

$9,151

of Payroll Protection Program loans (“PPP Loans”), which

may

be forgiven if the Company meets certain requirements. See Note

7,

 “Debt and Credit Agreements,” of these condensed consolidated financial statements for a complete description of the PPP Loans. 

On

August 18, 2020,

the Company filed a “shelf” registration statement on Form S-

3,

which was declared effective by the Securities and Exchange Commission (the “SEC”) on

October 13, 2020 (

the “Form S-

3”

) and expires on

October 12, 2023.

This shelf registration statement, which includes a base prospectus, allows the Company at any time to offer any combination of securities described in the prospectus in

one

or more offerings. Unless otherwise specified in the prospectus supplement accompanying the base prospectus, the Company would use the net proceeds from the sale of any securities offered pursuant to the shelf registration statement for general corporate purposes. 

On

March 9, 2021,

the Company entered into an Equity Distribution Agreement (the “Equity Distribution Agreement”) with Craig-Hallum Capital Group, LLC (the “Manager”). Pursuant to the terms of the Equity Distribution Agreement, the Company

may

sell from time to time through the Manager shares of the Company's common stock, par value

$0.001

per share with an aggregate sales price of up to

$10,000.

The Company will pay a commission to the Manager of

2.75%

of the gross proceeds of the sale of the shares sold under the Equity Distribution Agreement and reimburse the Manager for all expenses incident to the performance of its obligations under the Equity Distribution Agreement. During the quarter ended

March 

31,

 

2021,

the Company issued

1,100,000

 shares of the Company's common stock thereunder. The net proceeds (before upfront costs) to the Company from the sale of such shares were approximately

$6,436

 after deducting commissions paid of approximately

$182

and before deducting other expenses of

$335.

 

On

March 27, 2020,

the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was signed into law providing numerous tax provisions and other stimulus measures, including an employee retention credit (“ERC”), which is a refundable tax credit against certain employment taxes. The Taxpayer Certainty and Disaster Tax Relief Act of

2020

and the American Rescue Plan Act of

2021

extended and expanded the availability of the ERC. The ERC is available through

December 31, 2021

and is equal to

70%

of qualified wages (which includes employer qualified health plan expenses) paid to employees. During each quarter in

2021,

a maximum of

$10,000

in qualified wages for each employee is eligible for the ERC. Therefore, the maximum tax credit that can be claimed by an eligible employer in

2021

is

$7,000

per employee per calendar quarter. The Company qualified for the ERC in the

first

quarter of

2021

because it had a gross receipts decrease of more than

20%

from the

first

quarter of

2019,

the relevant criteria for the ERC. As a result of the Company averaging 

500

or fewer full-time employees in

2019,

all wages paid to employees were eligible for the ERC (rather than just wages paid to employees

not

providing services). During the

three

months ended

March 31, 2021,

the Company recorded a benefit of

$3,372

 in Other income (expense), net in the Company's condensed consolidated statement of operations which is included in the line titled Employee retention credit receivable in the Company's condensed consolidated balance sheet at

March 31, 2021. 

The Company anticipates that current cash resources (which includes proceeds from the PPP Loans), expected receipts under the ERC, amounts available under the Credit Facility, cash to be generated from operations and any potential proceeds from the sale of further Company securities under the Form S-

3

will be adequate to meet the Company's liquidity needs for at least the next

twelve

months.

If assumptions regarding the Company's production, sales and subsequent collections from certain of the Company's large customers, as well as customer deposits and revenues generated from new customer orders, are materially inconsistent with management's expectations, particularly in light of the COVID-

19

pandemic and its effects on domestic and global economies, the Company

may

in the future encounter cash flow and liquidity issues. If the Company's operational performance deteriorates significantly, it

may

be unable to comply with existing financial covenants, and could lose access to the Credit Facility. This could limit the Company's operational flexibility, require a delay in making planned investments and/or require the Company to seek additional equity or debt financing. Any additional equity financing, if available,

may

be dilutive to stockholders, and additional debt financing, if available, would likely require new financial covenants or impose other restrictions on the Company. While the Company believes that it will continue to have sufficient cash available to operate its businesses and to meet its financial obligations and debt covenants, there can be

no

assurances that its operations will generate sufficient cash, or that credit facilities will be available in an amount sufficient to enable the Company to meet these financial obligations.

Management's Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities as of the date of the financial statements and reported amounts of revenues and expenses during the reported period. Significant estimates, among others, include revenue recognition, future cash flows, inventory reserves, warranty reserves, impairment of long-lived assets, allowance for doubtful accounts and health insurance reserves. Although these estimates are based upon management's best knowledge of current events and actions that the Company

may

undertake in the future, actual results could differ from these estimates, particularly in light of the COVID-

19

pandemic.

XML

Note 2 - Revenues

3 Months Ended

Mar. 31, 2021

Notes to Financial Statements

Revenue from Contract with Customer [Text Block]

NOTE

2

— REVENUES

Revenues are recognized when control of the promised goods or services is transferred to customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services.

The following table presents the Company's revenues disaggregated by revenue source for the

three

months ended

March 31, 2021

and

2020

:

	Three Months Ended March 31,
	2021			2020
Heavy Fabrications	$	22,777		$	38,368
Gearing		5,349			6,227
Industrial Solutions		4,604			4,039
Eliminations		(2	)		-
Consolidated	$	32,728		$	48,634

Revenue within the Company's Gearing and Industrial Solutions segments, as well as industrial fabrication product line revenues within the Heavy Fabrications segment, are generally recognized at a point in time, typically when the promised goods or services are transferred to its customers in an amount that reflects the consideration it expects to be entitled to in exchange for those goods or services. A performance obligation is a promise in a contract to transfer a distinct product or service to the customer. The Company measures revenue based on the consideration specified in the purchase order and revenue is recognized when the performance obligations are satisfied. If applicable, the transaction price of a contract is allocated to each distinct performance obligation and recognized as revenue when or as the customer receives the benefit of the performance obligation.

For tower sales within the Company's Heavy Fabrications segment, products are sold under terms included in bill and hold sales arrangements that result in different timing for revenue recognition. The Company recognizes revenue under these arrangements only when there is a substantive reason for the agreement, the ordered goods are identified separately as belonging to the customer and

not

available to fill other orders, the goods are currently ready for physical transfer to the customer, and the Company does

not

have the ability to use the product or to direct it to another customer. Assuming these required revenue recognition criteria are met, revenue is recognized upon completion of product manufacture and customer acceptance.

During the

three

months ended

March 

31,

 

2021,

the Company recognized

$172

 of revenue within the Gearing segment and

$1,153

 within the Heavy Fabrications segment over time, as the products had

no

alternative use to the Company and the Company had an enforceable right to payment, including profit, upon termination of the contracts. Since the projects are labor intensive, the Company uses labor hours as the input measure of progress for the applicable contracts. Contract assets are recorded when performance obligations are satisfied but the Company is

not

yet entitled to payment. The Company recognized

$269

of net contract assets during the

first

quarter associated with this revenue which represents the Company's rights to consideration for work completed but

not

billed at the end of the period. The Company did

not

recognize any revenue over time during the quarter ended

March 

31,

2020.

The Company generally expenses sales commissions when incurred. These costs are recorded within selling, general and administrative expenses. Customer deposits, deferred revenue and other receipts are deferred and recognized when the revenue is realized and earned. Cash payments to customers are classified as reductions of revenue in the Company's statement of operations.

The Company does

not

disclose the value of the unsatisfied performance obligations for contracts with an original expected length of

one

year or less.

XML

Note 3 - Earnings Per Share

3 Months Ended

Mar. 31, 2021

Notes to Financial Statements

Earnings Per Share [Text Block]

NOTE

3

— EARNINGS PER SHARE

 

The following table presents a reconciliation of basic and diluted earnings per share for the

three

months ended

March 31, 2021

and

2020

, as follows: 

	Three Months Ended
	March 31,
	2021			2020
Basic earnings per share calculation:
Net (loss) income	$	(1,210	)	$	954
Weighted average number of common shares outstanding		17,178,136			16,596,236
Basic net (loss) income per share	$	(0.07	)	$	0.06
Diluted earnings per share calculation:
Net (loss) income	$	(1,210	)	$	954
Weighted average number of common shares outstanding		17,178,136			16,596,236
Common stock equivalents:
Non-vested stock awards (1)		—			137,038
Weighted average number of common shares outstanding		17,178,136			16,733,274
Diluted net (loss) income per share	$	(0.07	)	$	0.06

( 1 ) Restricted stock units granted and outstanding of 1,171,093  as of March 31, 2021, are excluded from the computation of diluted earnings due to the anti-dilutive effect as a result of the Company's net loss for the three months ended March 31, 2021.

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Note 4 - Inventories

3 Months Ended

Mar. 31, 2021

Notes to Financial Statements

Inventory Disclosure [Text Block]

NOTE

4

— INVENTORIES

 

The components of inventories as of

March 31, 2021

and

December 31, 2020

are summarized as follows:

	March 31,			December 31,
	2021			2020
Raw materials	$	25,406		$	14,586
Work-in-process		14,272			12,634
Finished goods		2,843			2,704
		42,521			29,924
Less: Reserve for excess and obsolete inventory		(2,245	)		(3,200	)
Net inventories	$	40,276		$	26,724

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Note 5 - Intangible Assets

3 Months Ended

Mar. 31, 2021

Notes to Financial Statements

Intangible Assets Disclosure [Text Block]

NOTE

5

— INTANGIBLE ASSETS

Intangible assets represent the fair value assigned to definite-lived assets such as trade names and customer relationships as part of the Company's acquisition of Brad Foote completed in

2007

as well as the noncompetition agreements, trade names and customer relationships that were part of the Company's acquisition of Red Wolf Company, LLC completed in

2017.

Intangible assets are amortized on a straight-line basis over their estimated useful lives, with a remaining life range from 

2

 to

7

years.

As of

March 31, 2021

and

December 31, 2020

, the cost basis, accumulated amortization and net book value of intangible assets were as follows:

	March 31, 2021												December 31, 2020
											Remaining												Remaining
											Weighted												Weighted
						Accumulated			Net		Average							Accumulated			Net		Average
	Cost		Accumulated			Impairment			Book		Amortization				Accumulated			Impairment			Book		Amortization
	Basis		Amortization			Charges			Value		Period		Cost		Amortization			Charges			Value		Period
Intangible assets:
Noncompete agreements	$	170	$	(118	)	$	—		$	52		1.8	$	170	$	(111	)	$	—		$	59		2.1
Customer relationships		15,979		(7,055	)		(7,592	)		1,332		4.7		15,979		(6,979	)		(7,592	)		1,408		4.9
Trade names		9,099		(6,480	)		—			2,619		6.5		9,099		(6,380	)		—			2,719		6.8
Intangible assets	$	25,248	$	(13,653	)	$	(7,592	)	$	4,003		4.4	$	25,248	$	(13,470	)	$	(7,592	)	$	4,186		4.6

As of

March 31, 2021

, estimated future amortization expense was as follows:

2021	$	550
2022		725
2023		664
2024		661
2025		661
2026 and thereafter		742
Total	$	4,003

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Note 6 - Accrued Liabilities

3 Months Ended

Mar. 31, 2021

Notes to Financial Statements

Accounts Payable and Accrued Liabilities Disclosure [Text Block]

NOTE

6

— ACCRUED LIABILITIES

Accrued liabilities as of

March 31, 2021

and

December 31, 2020

consisted of the following: 

	March 31,		December 31,
	2021		2020
Accrued payroll and benefits	$	5,296	$	5,320
Fair value of interest rate swap		118		148
Accrued property taxes		186		—
Income taxes payable		115		78
Accrued professional fees		505		176
Accrued warranty liability		40		33
Self-insured workers compensation reserve		140		74
Accrued other		331		478
Total accrued liabilities	$	6,731	$	6,307

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Note 7 - Debt and Credit Agreements

3 Months Ended

Mar. 31, 2021

Notes to Financial Statements

Debt Disclosure [Text Block]

NOTE

7

— DEBT AND CREDIT AGREEMENTS

The Company's outstanding debt balances as of

March 31, 2021

and

December 31, 2020

consisted of the following:

	March 31,			December 31,
	2021			2020
Line of credit	$	4,468		$	1,245
PPP Loans		9,151			9,151
Other notes payable		609			163
Long-term debt		228			228
Less: Current portion		(5,076	)		(1,406	)
Long-term debt, net of current maturities	$	9,380		$	9,381

Credit Facility

On

October 26, 2016,

the Company established a

three

-year secured revolving line of credit with CIBC Bank USA (“CIBC”). This line of credit has been amended from time to time. On

February 25, 2019,

the line of credit was expanded and extended for

three

years when the Company and its subsidiaries entered into an Amended and Restated Loan and Security Agreement (the

“2016

Amended and Restated Loan Agreement”), with CIBC as administrative agent and sole lead arranger and the other financial institutions party thereto, providing the Company and its subsidiaries with a

$35,000

secured credit facility (as amended to date, the “Credit Facility”). The obligations under the Credit Facility are secured by, subject to certain exclusions, (i) a

first

priority security interest in all accounts receivable, inventory, equipment, cash and investment property, and (ii) a mortgage on the Abilene, Texas tower and Pittsburgh, Pennsylvania gearing facilities.

On

October 

29,

2020,

the Company executed the First Amendment to the

2016

Amended and Restated Loan Agreement (the “First Amendment”), implementing a payoff of a syndicated lender and a pricing grid based on the Company's trailing

twelve

month EBITDA under which applicable margins range from

2.25%

to

2.75%

for LIBOR rate loans and

0.00%

and

0.75%

for base rate loans, and extending the term of the Credit Facility to 

July 

31,

2023.

The Credit Facility is an asset-based revolving credit facility, pursuant to which the CIBC advances funds against a borrowing base consisting of approximately (a)

85%

of the face value of eligible receivables of the Company and the subsidiaries, plus (b) the lesser of (i)

50%

of the lower of cost or market value of eligible inventory of the Company, (ii)

85%

of the orderly liquidation value of eligible inventory and (iii)

$12.5

million, plus (c) the lesser of (i) the sum of (A)

75%

of the appraised net orderly liquidation value of the Company's eligible machinery and equipment plus (B)

50%

of the fair market value of the Company's mortgaged property and (ii)

$12

million. Subject to certain borrowing base conditions, the aggregate Credit Facility limit under the

2016

Amended and Restated Loan Agreement is

$35

million with a sublimit for letters of credit of

$10

million. Borrowings under the Credit Facility bear interest at a per annum rate equal to, at the option of the Company, the one,

two

or

three

-month LIBOR rate or the base rate, plus a margin. The Company must also pay an unused facility fee equal to

0.50%

per annum on the unused portion of the Credit Facility along with other standard fees. With the exception of the balance impacted by the interest rate swap (as described below), the Company is allowed to prepay in whole or in part advances under the Credit Facility without penalty or premium other than customary “breakage” costs with respect to LIBOR loans.

The Credit Facility contains customary representations and warranties applicable to the Company and the subsidiaries. It also contains a requirement that the Company, on a consolidated basis, maintain a minimum quarterly fixed charge coverage ratio, along with other customary restrictive covenants, certain of which are subject to materiality thresholds, baskets and customary exceptions and qualifications. The Company was in compliance with all covenants under the Credit Facility as of

March 

31,

2021.

On

February 

23,

 

2021,

 the Company executed the Second Amendment to the 

2016

 Amended and Restated Loan Agreement (the “Second Amendment”) which waived testing of the fixed charge coverage covenant for the quarters ending

March 31, 2021

and

June 30, 2021,

added a new liquidity covenant applicable to the quarter ending

March 31, 2021,

and new minimum EBITDA covenants applicable to the quarters ending

March 31, 2021

and

June 30 2021.  

In conjunction with the

2016

Amended and Restated Loan Agreement, during

June 2019,

the Company entered into a floating to fixed interest rate swap with CIBC. The swap agreement has a notional amount of

$6,000

and a schedule matching that of the underlying loan that synthetically fixes the interest rate on LIBOR borrowings for the entire term of the Credit Facility at

2.13%,

before considering the Company's risk premium. The interest rate swap is accounted for using mark-to-market accounting. Accordingly, changes in the fair value of the swap each reporting period are adjusted through earnings, which

may

subject the Company's results of operations to non-cash volatility. The interest rate swap liability is included in the “Accrued liabilities” line item of the Company's condensed consolidated financial statements as of

March 31, 2021

and

December 31, 2020

.

As of

March 31, 2021

, there was

$4,468

 of outstanding indebtedness under the Credit Facility, with the ability to borrow an additional

$18,640,

 under the Credit Facility.

Other

 

In

2016,

the Company entered into a

$570

loan agreement with the Development Corporation of Abilene which is included in the “Long-term debt, less current maturities” line item of our condensed consolidated financial statements as of

March 31, 2021

and

December 31, 2020

. The loan is forgivable upon the Company meeting and maintaining specific employment thresholds. During each of the years

2020,

2019,

and

2018,

$114

of the loan was forgiven. As of

March 31, 2021

, the loan balance was

$228.

In addition, the Company has outstanding notes payable for capital expenditures in the amount of

$609

 and

$163

as of

March 31, 2021

and

December 31, 2020

, respectively, with

$609

 and

$161

 included in the “Line of credit and other notes payable” line item of the Company's condensed consolidated financial statements as of

March 31, 2021

and

December 31, 2020

, respectively. The notes payable have monthly payments that range from

$1

to

$36

and an interest rate of approximately

5%.

The equipment purchased is utilized as collateral for the notes payable. The outstanding notes payable have maturity dates that range from

May

2021

to

August 2022.

On

April 15, 2020,

the Company received funds under notes and related documents with CIBC, under the Paycheck Protection Program (the “PPP”) which was established under the CARES Act enacted on

March 27, 2020

in response to the COVID-

19

pandemic and is administered by the U.S. Small Business Administration (the “SBA”). The Company received total proceeds of

$9,530

from the PPP loans and made repayments of

$379

on

May 13, 2020.

Under the terms of the CARES Act, as amended by the Paycheck Protection Program Flexibility Act of

2020

enacted on

June 5, 2020 (

the “Flexibility Act”), the PPP Loans, and accrued interest and fees

may

be forgiven following a period of

twenty-four

weeks after PPP Loan proceeds are received (the “covered period”) if they are used for qualifying expenses as described in the CARES Act including payroll costs and benefits (which must equal or exceed

60%

of the amount requested to be forgiven), rent, mortgage interest, and utilities, which are subject to certain reductions based on the number of full time equivalent employees and the level of compensation for employees during such covered period. The amount of loan forgiveness will be reduced if the borrower terminates employees or significantly reduces salaries during such period, subject to certain exceptions. Subject to the terms and conditions applicable to loans administered by the SBA under the PPP, as amended by the Flexibility Act, the unforgiven portion of a PPP Loan is payable over a

two

year period at an interest rate of

1.00%,

with a deferral of payments of principal, interest and fees until the date on which the SBA remits the loan forgiveness amount to the lender (or notifies the lender that

no

loan forgiveness is allowed), provided that the borrower applies for forgiveness within

10

months after the last day of the covered period (and if

not,

payment of principal and interest shall commence

10

months after the last day of the covered period). The Company used at least

60%

of the amount of the PPP Loans proceeds to pay for payroll costs and the balance on other eligible qualifying expenses that the Company believes to be consistent with the terms of the PPP and submitted its forgiveness applications to CIBC during the

first

 quarter of 

2021.

While the Company currently believes that its use of the loan proceeds will meet the conditions for forgiveness of the PPP Loans, the Company cannot provide assurance that it has

not

taken and will

not

take actions that could cause the Company to be ineligible for forgiveness of the PPP Loans, in whole or in part.

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Note 8 - Leases

3 Months Ended

Mar. 31, 2021

Notes to Financial Statements

Lessee Operating and Finance Leases [Text Block]

NOTE

8

— LEASES

The Company leases certain facilities and equipment. On

January 1, 2019,

the Company adopted ASU

2016

-

02,

Leases (“Topic

842”

) and ASU

2018

-

11

using the cumulative effect method and has elected to apply each available practical expedient. The adoption of Topic

842

resulted in the Company recognizing operating lease liabilities totaling

$19,508

with a corresponding right-of-use (“ROU”) asset of

$17,613

based on the present value of the minimum rental payments of such leases. The variance between the ROU asset balance and the lease liability is a deferred rent liability that existed prior to the adoption of Topic

842

and was offset against the ROU asset balance during the adoption. The discount rates used for leases accounted for under ASC

842

are based on an interest rate yield curve developed for the leases in the Company's lease portfolio.

The Company has elected to apply the short-term lease exception to all leases of

one

year or less. During the

three

months ended

March 31, 2021

 and

March 31, 2020,

the Company had an additional operating lease that resulted in right-of-use assets obtained in exchange for lease obligations of

$907

and

$4,380,

respectively. Additionally, during the 

three

months ended

March 31, 2021

, the Company had additional finance leases that resulted in property, plant, and equipment obtained in exchange for lease obligations of

$263.

Some of the Company's facility leases include options to renew. The exercise of the renewal options is typically at the Company's discretion. The Company regularly evaluates the renewal options and includes them in the lease term when the Company is reasonably certain to exercise them.

Quantitative information regarding the Company's leases is as follows:

	Three Months Ended March 31,
	2021			2020
Components of lease cost
Finance lease cost components:
Amortization of finance lease assets	$	186		$	129
Interest on finance lease liabilities		68			26
Total finance lease costs		254			155
Operating lease cost components:
Operating lease cost		759			765
Short-term lease cost		196			132
Variable lease cost (1)		230			195
Sublease income		(46	)		(45	)
Total operating lease costs		1,139			1,047
Total lease cost	$	1,393		$	1,202
Supplemental cash flow information related to our operating leases is as follows for the three months ended March 31, 2021 and 2020:
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash outflow from operating leases	$	887			888
Weighted-average remaining lease term-finance leases at end of period (in years)		1.9			1.2
Weighted-average remaining lease term-operating leases at end of period (in years)		9.5			10.5
Weighted-average discount rate-finance leases at end of period		9.0	%		9.2	%
Weighted-average discount rate-operating leases at end of period		8.5	%		8.8	%

( 1 ) Variable lease costs consist primarily of taxes, insurance, utilities, and common area or other maintenance costs for the Company's leased facilities and equipment.

As of

March 31, 2021

, future minimum lease payments under finance leases and operating leases were as follows:

	Finance			Operating
	Leases			Leases			Total
2021	$	1,317		$	2,668		$	3,985
2022		1,400			3,474			4,874
2023		732			3,388			4,120
2024		151			2,933			3,084
2025		84			3,015			3,099
2026 and thereafter		—			17,103			17,103
Total lease payments		3,684			32,581			36,265
Less—portion representing interest		(337	)		(11,090	)		(11,427	)
Present value of lease obligations		3,347			21,491			24,838
Less—current portion of lease obligations		(1,456	)		(1,743	)		(3,199	)
Long-term portion of lease obligations	$	1,891		$	19,748		$	21,639

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Note 9 - Fair Value Measurements

3 Months Ended

Mar. 31, 2021

Notes to Financial Statements

Fair Value Disclosures [Text Block]

NOTE

9

— FAIR VALUE MEASUREMENTS

 

Fair Value of Financial Instruments

 

The carrying amounts of the Company's financial instruments, which include cash, accounts receivable, accounts payable and customer deposits, approximate their respective fair values due to the relatively short-term nature of these instruments. Based upon interest rates currently available to the Company for debt with similar terms, the carrying value of the Company's long-term debt is approximately equal to its fair value. 

The Company entered into an interest rate swap in

June 2019

to mitigate the exposure to the variability of LIBOR for its floating rate debt described in Note

7,

“Debt and Credit Agreements,” of these condensed consolidated financial statements. The fair value of the interest rate swap is reported in “Accrued liabilities” and the change in fair value is reported in “Interest expense, net” of these condensed consolidated financial statements. The fair value of the interest rate swap is estimated as the net present value of projected cash flows based on forward interest rates at the balance sheet date.

The Company is required to provide disclosure and categorize assets and liabilities measured at fair value into

one

of

three

different levels depending on the assumptions (i.e., inputs) used in the valuation. Level

1

provides the most reliable measure of fair value while Level

3

generally requires significant management judgment. Financial assets and liabilities are classified in their entirety based on the lowest level of input significant to the fair value measurement. Financial instruments are assessed quarterly to determine the appropriate classification within the fair value hierarchy. Transfers between fair value classifications are made based upon the nature and type of the observable inputs. The fair value hierarchy is defined as follows:

Level

1

— Valuations are based on unadjusted quoted prices in active markets for identical assets or liabilities.

Level

2

— Valuations are based on quoted prices for similar assets or liabilities in active markets, or quoted prices in markets that are

not

active for which significant inputs are observable, either directly or indirectly. 

Level

3

— Valuations are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. Inputs reflect management's best estimate of what market participants would use in valuing the asset or liability at the measurement date.

The following tables represent the fair values of the Company's financial liabilities as of

March 31, 2021

and

December 31, 2020

:

	March 31, 2021
	Level 1		Level 2		Level 3		Total
Liabilities measured on a recurring basis:
Interest rate swap	$	—	$	118	$	—	$	118
Total liabilities at fair value	$	—	$	118	$	—	$	118

	December 31, 2020
	Level 1		Level 2		Level 3		Total
Liabilities measured on a recurring basis:
Interest rate swap	$	—	$	148	$	—	$	148
Total liabilities at fair value	$	—	$	148	$	—	$	148

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Note 10 - Income Taxes

3 Months Ended

Mar. 31, 2021

Notes to Financial Statements

Income Tax Disclosure [Text Block]

NOTE

10

— INCOME TAXES

 

Effective tax rates differ from federal statutory income tax rates primarily due to changes in the Company's valuation allowance, permanent differences and provisions for state and local income taxes. As of

March 31, 2021

, the Company has a full valuation allowance recorded against deferred tax assets. During the

three

months ended

March 31, 2021

, the Company recorded a provision for income taxes of

$32,

compared to a provision for income taxes of

$52

 during the

three

months ended

March 31, 2020

. 

The Company files income tax returns in U.S. federal and state jurisdictions. As of

March 31, 2021

, open tax years in federal and some state jurisdictions date back to

1996

due to the taxing authorities' ability to adjust operating loss carryforwards. As of

December 31, 2020

, the Company had federal and unapportioned state net operating loss (“NOL”) carryforwards of

$260,598

 of which

$227,781

will generally begin to expire in

2026.

The majority of the NOL carryforwards will expire in various years from

2028

through

2037.

NOLs generated after

January 1, 2018

will

not

expire.

Since the Company has

no

unrecognized tax benefits, they will

not

have an impact on the condensed consolidated financial statements as a result of the expiration of the applicable statues of limitations within the next

twelve

months. In addition, Section 

382

of the Internal Revenue Code of

1986,

as amended (the “IRC”), generally imposes an annual limitation on the amount of NOL carryforwards and associated built-in losses that

may

be used to offset taxable income when a corporation has undergone certain changes in stock ownership. The Company's ability to utilize NOL carryforwards and built-in losses

may

be limited, under IRC Section

382

or otherwise, by the Company's issuance of common stock or by other changes in stock ownership. Upon completion of the Company's analysis of IRC Section 

382

in

2010,

the Company determined that aggregate changes in stock ownership have triggered an annual limitation on NOL carryforwards and built-in losses available for utilization, thereby currently limiting annual NOL usage to

$14,284

per year. Further limitations

may

occur, depending on additional future changes in stock ownership. To the extent the Company's use of NOL carryforwards and associated built-in losses is significantly limited in the future, the Company's income could be subject to U.S. corporate income tax earlier than it would be if the Company were able to use NOL carryforwards and built-in losses without such limitation, which could result in lower profits and the loss of benefits from these attributes. 

In

February 2013,

the Company adopted a Stockholder Rights Plan, which was amended and extended in

February 2016

and again in

February 2019 (

as amended, the “Rights Plan”). The Rights Plan is designed to preserve the Company's substantial tax assets associated with NOL carryforwards under IRC Section

382.

The amendment to the Rights Plan was most recently approved by the Company's stockholders at the Company's

2019

Annual Meeting of Stockholders and has a term of

three

years.

The Rights Plan is intended to act as a deterrent to any person or group, together with its affiliates and associates, becoming the beneficial owner of

4.9%

or more of the Company's common stock and thereby triggering a further limitation of the Company's available NOL carryforwards. In connection with the adoption of the Rights Plan, the Board declared a non-taxable dividend of

one

preferred share purchase right (a “Right”) for each outstanding share of the Company's common stock to the Company's stockholders of record as of the close of business on

February 

22,

2013.

Each Right entitles its holder to purchase from the Company

one one

-thousandth of a share of the Company's Series A Junior Participating Preferred Stock at an exercise price of

$4.25

per Right, subject to adjustment. As a result of the Rights Plan, any person or group that acquires beneficial ownership of

4.9%

or more of the Company's common stock without the approval of the Board would be subject to significant dilution in the ownership interest of that person or group. Stockholders who owned

4.9%

or more of the outstanding shares of the Company's common stock as of

February 

12,

2013

will

not

trigger the preferred share purchase rights unless they acquire additional shares after that date. 

As of

March 31, 2021

, the Company had

no

unrecognized tax benefits. The Company recognizes interest and penalties related to uncertain tax positions as income tax expense. The Company had

no

accrued interest and penalties as of

March 31, 2021

.

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Note 11 - Share-based Compensation

3 Months Ended

Mar. 31, 2021

Notes to Financial Statements

Share-based Payment Arrangement [Text Block]

NOTE

11

— SHARE-BASED COMPENSATION

 

There was

no

 stock option activity during the

three

months ended

March 31, 2021

 and

no

 stock options were outstanding as of

March 31, 2021. 

The following table summarizes the Company's restricted stock unit and performance award activity during the

three

months ended

March 31, 2021

: 

				Weighted Average
	Number of			Grant-Date Fair Value
	Shares			Per Share
Unvested as of December 31, 2020		1,332,884		$	1.86
Granted		80,014		$	2.06
Vested		(241,805	)	$	2.14
Unvested as of March 31, 2021		1,171,093		$	1.84

Under certain situations, shares are withheld from issuance to cover taxes for the vesting of restricted stock units and performance awards. For the

three

months ended

March 31, 2021,

105,399

of such shares were withheld to cover

$847

of tax obligations. 

The following table summarizes share-based compensation expense included in the Company's condensed consolidated statements of operations for the

three

months ended

March 31, 2021

and

2020

, as follows: 

	Three Months Ended March 31,
	2021		2020
Share-based compensation expense:
Cost of sales	$	26	$	22
Selling, general and administrative		193		286
Net effect of share-based compensation expense on net income	$	219	$	308
Reduction in earnings per share:
Basic earnings per share	$	0.01	$	0.02
Diluted earnings per share	$	0.01	$	0.02

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Note 12 - Legal Proceedings

3 Months Ended

Mar. 31, 2021

Notes to Financial Statements

Legal Matters and Contingencies [Text Block]

NOTE

12

— LEGAL PROCEEDINGS

The Company is party to a variety of legal proceedings that arise in the normal course of its business. While the results of these legal proceedings cannot be predicted with certainty, management believes that the final outcome of these proceedings will

not

have a material adverse effect, individually or in the aggregate, on the Company's results of operations, financial condition or cash flows. Due to the inherent uncertainty of litigation, there can be

no

assurance that the resolution of any particular claim or proceeding would

not

have a material adverse effect on the Company's results of operations, financial condition or cash flows. It is possible that if

one

or more of such matters were decided against the Company, the effects could be material to the Company's results of operations in the period in which the Company would be required to record or adjust the related liability and could also be material to the Company's financial condition and cash flows in the periods the Company would be required to pay such liability.

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Note 13 - Recent Accounting Pronouncements

3 Months Ended

Mar. 31, 2021

Notes to Financial Statements

Accounting Standards Update and Change in Accounting Principle [Text Block]

NOTE

13

— RECENT ACCOUNTING PRONOUNCEMENTS

 

The Company reviews new accounting standards as issued. Although some of the accounting standards issued or effective in the current fiscal year

may

be applicable to it, the Company believes that

none

of the new standards have a significant impact on its condensed consolidated financial statements.

XML

Note 14 - Segment Reporting

3 Months Ended

Mar. 31, 2021

Notes to Financial Statements

Segment Reporting Disclosure [Text Block]

NOTE

14—

SEGMENT REPORTING

 

The Company is organized into reporting segments based on the nature of the products offered and business activities from which it earns revenues and incurs expenses for which discrete financial information is available and regularly reviewed by the Company's chief operating decision maker.

The Company's segments and their product and service offerings are summarized below: 

Heavy Fabrications

The Company provides large, complex and precision fabrications to customers in a broad range of industrial markets. The Company's most significant presence is within the U.S. wind energy industry, although it has diversified into other industrial markets in order to improve capacity utilization, reduce customer concentrations, and reduce exposure to uncertainty related to governmental policies currently impacting the U.S. wind energy industry. Within the U.S. wind energy industry, the Company provides steel towers and adapters primarily to wind turbine manufacturers. Production facilities, located in Manitowoc, Wisconsin and Abilene, Texas, are situated in close proximity to the primary U.S. domestic wind energy and equipment manufacturing hubs. The

two

facilities have a combined annual tower production capacity of up to approximately

550

towers (

1,650

tower sections), sufficient to support turbines generating more than

1,100

 megawatts of power. The Company has expanded production capabilities and leveraged manufacturing competencies, including welding, lifting capacity and stringent quality practices, into aftermarket and original equipment manufacturer (“OEM”) components utilized in surface and underground mining, construction, material handling, oil and gas (“O&G”) and other infrastructure markets.

Gearing 

The Company provides gearing and gearboxes to a broad set of customers in diverse markets including; onshore and offshore O&G fracking and drilling, surface and underground mining, wind energy, steel, material handling and other infrastructure markets. The Company has manufactured loose gearing, gearboxes and systems, and provided heat treat services for aftermarket and OEM applications for nearly a century. The Company uses an integrated manufacturing process, which includes machining and finishing processes in Cicero, Illinois, and heat treatment in Neville Island, Pennsylvania.

Industrial Solutions 

The Company provides supply chain solutions, inventory management, kitting and assembly services, primarily serving the combined cycle natural gas turbine market.

Corporate

“Corporate” includes the assets and selling, general and administrative expenses of the Company's corporate office. “Eliminations” comprises adjustments to reconcile segment results to consolidated results. 

The accounting policies of the reportable segments are the same as those referenced in Note

1,

“Basis of Presentation” of these condensed consolidated financial statements. Summary financial information by reportable segment for the

three

months ended

March 31, 2021

and

2020

is as follows:

	Heavy Fabrications			Gearing			Industrial Solutions			Corporate			Eliminations			Consolidated
For the Three Months Ended March 31, 2021
Revenues from external customers	$	22,777			5,349			4,602			—			—		$	32,728
Intersegment revenues		—			—			2			—			(2	)		—
Net revenues		22,777			5,349			4,604			—			(2	)		32,728
Operating loss		(1,700	)		(989	)		(14	)		(1,608	)		—			(4,311	)
Depreciation and amortization		945			458			106			44			—			1,553
Capital expenditures		563			—			20			29			—			612

	Heavy Fabrications		Gearing			Industrial Solutions		Corporate			Eliminations		Consolidated
For the Three Months Ended March 31, 2020
Revenues from external customers	$	38,368		6,227			4,039		—			—	$	48,634
Operating profit (loss)		3,541		(261	)		192		(1,792	)		—		1,680
Depreciation and amortization		963		512			104		33			—		1,612
Capital expenditures		381		168			120		1			—		670

	Total Assets as of
	March 31,			December 31,
Segments:	2021			2020
Heavy Fabrications	$	55,689		$	40,438
Gearing		43,181			43,319
Industrial Solutions		8,222			10,244
Corporate		227,891			220,428
Eliminations		(200,762	)		(194,747	)
	$	134,221		$	119,682

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Note 15 - Commitments and Contingencies

3 Months Ended

Mar. 31, 2021

Notes to Financial Statements

Commitments and Contingencies Disclosure [Text Block]

NOTE

15

— COMMITMENTS AND CONTINGENCIES

 

Environmental Compliance and Remediation Liabilities

 

The Company's operations and products are subject to a variety of environmental laws and regulations in the jurisdictions in which the Company operates and sells products governing, among other things, air emissions, wastewater discharges, the use, handling and disposal of hazardous materials, soil and groundwater contamination, employee health and safety, and product content, performance and packaging. Certain environmental laws

may

impose the entire cost or a portion of the cost of investigating and cleaning up a contaminated site, regardless of fault, upon any

one

or more of a number of parties, including the current or previous owners or operators of the site. These environmental laws also impose liability on any person who arranges for the disposal or treatment of hazardous substances at a contaminated site. Third parties

may

also make claims against owners or operators of sites and users of disposal sites for personal injuries and property damage associated with releases of hazardous substances from those sites. 

Allowance for Doubtful Accounts

 

Based upon past experience and judgment, the Company establishes an allowance for doubtful accounts with respect to accounts receivable. The Company's standard allowance estimation methodology considers a number of factors that, based on its collections experience, the Company believes will have an impact on its credit risk and the collectability of its accounts receivable. These factors include individual customer circumstances, history with the Company, the length of the time period during which the account receivable has been past due and other relevant criteria. 

The Company monitors its collections and write-off experience to assess whether or

not

adjustments to its allowance estimates are necessary. Changes in trends in any of the factors that the Company believes

may

impact the collectability of its accounts receivable, as noted above, or modifications to its credit standards, collection practices and other related policies

may

impact the Company's allowance for doubtful accounts and its financial results. The activity in the accounts receivable allowance liability for the

three

months ended

March 31, 2021

and

2020

consisted of the following: 

	For the Three Months Ended March 31,
	2021			2020
Balance at beginning of period	$	473		$	127
Bad debt expense		5			55
Write-offs		(222	)		(19	)
Other adjustments		(1	)		(7	)
Balance at end of period	$	255		$	156

Collateral

 

In select instances, the Company has pledged specific inventory and machinery and equipment assets to serve as collateral on related payable or financing obligations. 

Liquidated Damages

 

In certain customer contracts, the Company has agreed to pay liquidated damages in the event of qualifying delivery or production delays. These damages are typically limited to a specific percentage of the value of the product in question and/or are dependent on actual losses sustained by the customer. The Company does

not

believe that this potential exposure will have a material adverse effect on the Company's consolidated financial position or results of operations. There was

no

reserve for liquidated damages as of 

March 31, 2021

or

December 31, 2020. 

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Note 2 - Revenues (Tables)

3 Months Ended

Mar. 31, 2021

Notes Tables

Disaggregation of Revenue [Table Text Block]

	Three Months Ended March 31,
	2021			2020
Heavy Fabrications	$	22,777		$	38,368
Gearing		5,349			6,227
Industrial Solutions		4,604			4,039
Eliminations		(2	)		-
Consolidated	$	32,728		$	48,634

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Note 3 - Earnings Per Share (Tables)

3 Months Ended

Mar. 31, 2021

Notes Tables

Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]

	Three Months Ended
	March 31,
	2021			2020
Basic earnings per share calculation:
Net (loss) income	$	(1,210	)	$	954
Weighted average number of common shares outstanding		17,178,136			16,596,236
Basic net (loss) income per share	$	(0.07	)	$	0.06
Diluted earnings per share calculation:
Net (loss) income	$	(1,210	)	$	954
Weighted average number of common shares outstanding		17,178,136			16,596,236
Common stock equivalents:
Non-vested stock awards (1)		—			137,038
Weighted average number of common shares outstanding		17,178,136			16,733,274
Diluted net (loss) income per share	$	(0.07	)	$	0.06

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Note 4 - Inventories (Tables)

3 Months Ended

Mar. 31, 2021

Notes Tables

Schedule of Inventory, Current [Table Text Block]

	March 31,			December 31,
	2021			2020
Raw materials	$	25,406		$	14,586
Work-in-process		14,272			12,634
Finished goods		2,843			2,704
		42,521			29,924
Less: Reserve for excess and obsolete inventory		(2,245	)		(3,200	)
Net inventories	$	40,276		$	26,724

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Note 5 - Intangible Assets (Tables)

3 Months Ended

Mar. 31, 2021

Notes Tables

Schedule of Finite-Lived Intangible Assets [Table Text Block]

	March 31, 2021												December 31, 2020
											Remaining												Remaining
											Weighted												Weighted
						Accumulated			Net		Average							Accumulated			Net		Average
	Cost		Accumulated			Impairment			Book		Amortization				Accumulated			Impairment			Book		Amortization
	Basis		Amortization			Charges			Value		Period		Cost		Amortization			Charges			Value		Period
Intangible assets:
Noncompete agreements	$	170	$	(118	)	$	—		$	52		1.8	$	170	$	(111	)	$	—		$	59		2.1
Customer relationships		15,979		(7,055	)		(7,592	)		1,332		4.7		15,979		(6,979	)		(7,592	)		1,408		4.9
Trade names		9,099		(6,480	)		—			2,619		6.5		9,099		(6,380	)		—			2,719		6.8
Intangible assets	$	25,248	$	(13,653	)	$	(7,592	)	$	4,003		4.4	$	25,248	$	(13,470	)	$	(7,592	)	$	4,186		4.6

Finite-lived Intangible Assets Amortization Expense [Table Text Block]

2021	$	550
2022		725
2023		664
2024		661
2025		661
2026 and thereafter		742
Total	$	4,003

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Note 6 - Accrued Liabilities (Tables)

3 Months Ended

Mar. 31, 2021

Notes Tables

Schedule of Accrued Liabilities [Table Text Block]

	March 31,		December 31,
	2021		2020
Accrued payroll and benefits	$	5,296	$	5,320
Fair value of interest rate swap		118		148
Accrued property taxes		186		—
Income taxes payable		115		78
Accrued professional fees		505		176
Accrued warranty liability		40		33
Self-insured workers compensation reserve		140		74
Accrued other		331		478
Total accrued liabilities	$	6,731	$	6,307

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Note 7 - Debt and Credit Agreements (Tables)

3 Months Ended

Mar. 31, 2021

Notes Tables

Schedule of Debt [Table Text Block]

	March 31,			December 31,
	2021			2020
Line of credit	$	4,468		$	1,245
PPP Loans		9,151			9,151
Other notes payable		609			163
Long-term debt		228			228
Less: Current portion		(5,076	)		(1,406	)
Long-term debt, net of current maturities	$	9,380		$	9,381

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Note 8 - Leases (Tables)

3 Months Ended

Mar. 31, 2021

Notes Tables

Schedule of Lease Quantitative Disclosure [Table Text Block]

	Three Months Ended March 31,
	2021			2020
Components of lease cost
Finance lease cost components:
Amortization of finance lease assets	$	186		$	129
Interest on finance lease liabilities		68			26
Total finance lease costs		254			155
Operating lease cost components:
Operating lease cost		759			765
Short-term lease cost		196			132
Variable lease cost (1)		230			195
Sublease income		(46	)		(45	)
Total operating lease costs		1,139			1,047
Total lease cost	$	1,393		$	1,202
Supplemental cash flow information related to our operating leases is as follows for the three months ended March 31, 2021 and 2020:
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash outflow from operating leases	$	887			888
Weighted-average remaining lease term-finance leases at end of period (in years)		1.9			1.2
Weighted-average remaining lease term-operating leases at end of period (in years)		9.5			10.5
Weighted-average discount rate-finance leases at end of period		9.0	%		9.2	%
Weighted-average discount rate-operating leases at end of period		8.5	%		8.8	%

Finance and Operating Lease Liability Maturity [Table Tex tBlock]

	Finance			Operating
	Leases			Leases			Total
2021	$	1,317		$	2,668		$	3,985
2022		1,400			3,474			4,874
2023		732			3,388			4,120
2024		151			2,933			3,084
2025		84			3,015			3,099
2026 and thereafter		—			17,103			17,103
Total lease payments		3,684			32,581			36,265
Less—portion representing interest		(337	)		(11,090	)		(11,427	)
Present value of lease obligations		3,347			21,491			24,838
Less—current portion of lease obligations		(1,456	)		(1,743	)		(3,199	)
Long-term portion of lease obligations	$	1,891		$	19,748		$	21,639

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Note 9 - Fair Value Measurements (Tables)

3 Months Ended

Mar. 31, 2021

Notes Tables

Fair Value, Liabilities Measured on Recurring Basis [Table Text Block]

	March 31, 2021
	Level 1		Level 2		Level 3		Total
Liabilities measured on a recurring basis:
Interest rate swap	$	—	$	118	$	—	$	118
Total liabilities at fair value	$	—	$	118	$	—	$	118

	December 31, 2020
	Level 1		Level 2		Level 3		Total
Liabilities measured on a recurring basis:
Interest rate swap	$	—	$	148	$	—	$	148
Total liabilities at fair value	$	—	$	148	$	—	$	148

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Note 11 - Share-based Compensation (Tables)

3 Months Ended

Mar. 31, 2021

Notes Tables

Schedule of Nonvested Restricted Stock Units Activity [Table Text Block]

				Weighted Average
	Number of			Grant-Date Fair Value
	Shares			Per Share
Unvested as of December 31, 2020		1,332,884		$	1.86
Granted		80,014		$	2.06
Vested		(241,805	)	$	2.14
Unvested as of March 31, 2021		1,171,093		$	1.84

Share-based Payment Arrangement, Expensed and Capitalized, Amount [Table Text Block]

	Three Months Ended March 31,
	2021		2020
Share-based compensation expense:
Cost of sales	$	26	$	22
Selling, general and administrative		193		286
Net effect of share-based compensation expense on net income	$	219	$	308
Reduction in earnings per share:
Basic earnings per share	$	0.01	$	0.02
Diluted earnings per share	$	0.01	$	0.02

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Note 14 - Segment Reporting (Tables)

3 Months Ended

Mar. 31, 2021

Notes Tables

Schedule of Segment Reporting Information, by Segment [Table Text Block]

	Heavy Fabrications			Gearing			Industrial Solutions			Corporate			Eliminations			Consolidated
For the Three Months Ended March 31, 2021
Revenues from external customers	$	22,777			5,349			4,602			—			—		$	32,728
Intersegment revenues		—			—			2			—			(2	)		—
Net revenues		22,777			5,349			4,604			—			(2	)		32,728
Operating loss		(1,700	)		(989	)		(14	)		(1,608	)		—			(4,311	)
Depreciation and amortization		945			458			106			44			—			1,553
Capital expenditures		563			—			20			29			—			612

	Heavy Fabrications		Gearing			Industrial Solutions		Corporate			Eliminations		Consolidated
For the Three Months Ended March 31, 2020
Revenues from external customers	$	38,368		6,227			4,039		—			—	$	48,634
Operating profit (loss)		3,541		(261	)		192		(1,792	)		—		1,680
Depreciation and amortization		963		512			104		33			—		1,612
Capital expenditures		381		168			120		1			—		670

	Total Assets as of
	March 31,			December 31,
Segments:	2021			2020
Heavy Fabrications	$	55,689		$	40,438
Gearing		43,181			43,319
Industrial Solutions		8,222			10,244
Corporate		227,891			220,428
Eliminations		(200,762	)		(194,747	)
	$	134,221		$	119,682

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Note 15 - Commitments and Contingencies (Tables)

3 Months Ended

Mar. 31, 2021

Notes Tables

Financing Receivable, Current, Allowance for Credit Loss [Table Text Block]

	For the Three Months Ended March 31,
	2021			2020
Balance at beginning of period	$	473		$	127
Bad debt expense		5			55
Write-offs		(222	)		(19	)
Other adjustments		(1	)		(7	)
Balance at end of period	$	255		$	156

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Note 1 - Basis of Presentation (Details Textual) - USD ($) $ / shares in Units, $ in Thousands		3 Months Ended
	Mar. 09, 2021	Mar. 31, 2021	Mar. 31, 2020	Dec. 31, 2020
Revenue as Percentage of Sales Associated with New Wind Turbine Installations		63.00%	74.00%
Debt and Lease Obligation, Total		$ 17,803
Debt, Current, Total		6,532
Line of Credit, Current		4,468
Long-term Debt, Excluding Current Maturities, Total		$ 9,380		$ 9,381
Common Stock, Par or Stated Value Per Share (in dollars per share)	$ 0.001	$ 0.001		$ 0.001
Proceeds from Issuance of Common Stock, Net		$ 6,101
Employee Retention Credit Receivable, Current		3,372
Nonoperating Income (Expense) [Member]
Employee Retention Credit Benefit		3,372
The ATM Agreement [Member]
Value of Shares Issuable, Maximum	$ 10,000
Sales Agent Commission Percentage	2.75%
Stock Issued During Period, Shares, New Issues (in shares)	1,100,000
Proceeds from Issuance of Common Stock, Net	$ 6,436
Payments of Stock Issuance Costs	$ 182
Other Stock Issuance Expenses		335
Paycheck Protection Program CARES Act [Member]
Long-term Debt, Excluding Current Maturities, Total		$ 9,151

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Note 2 - Revenues (Details Textual) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Revenue from Contract with Customer, Including Assessed Tax	$ 32,728	$ 48,634
Transferred over Time [Member]
Revenue from Contract with Customer, Including Assessed Tax		$ 0
Contract with Customer, Asset, after Allowance for Credit Loss, Total	269
Transferred over Time [Member] | Gearing [Member]
Revenue from Contract with Customer, Including Assessed Tax	172
Transferred over Time [Member] | Heavy Fabrications [Member]
Revenue from Contract with Customer, Including Assessed Tax	$ 1,153

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Note 2 - Revenues - Disaggregation of Revenue (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Revenues	$ 32,728	$ 48,634
Consolidation, Eliminations [Member]
Revenues	(2)
Heavy Fabrications [Member] | Operating Segments [Member]
Revenues	22,777	38,368
Gearing [Member] | Operating Segments [Member]
Revenues	5,349	6,227
Industrial Solutions [Member] | Operating Segments [Member]
Revenues	$ 4,604	$ 4,039

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Note 3 - Earnings Per Share (Details Textual)	3 Months Ended
	Mar. 31, 2021 shares
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount (in shares)	1,171,093

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Note 3 - Earnings Per Share - Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands		3 Months Ended
		Mar. 31, 2021	Mar. 31, 2020
Net (loss) income		$ (1,210)	$ 954
Weighted average number of common shares outstanding (in shares)		17,178,136	16,596,236
Basic net (loss) income per share (in dollars per share)		$ (0.07)	$ 0.06
Non-vested stock awards (in shares)	[1]		137,038
Weighted average number of common shares outstanding (in shares)		17,178,136	16,733,274
Diluted net (loss) income per share (in dollars per share)		$ (0.07)	$ 0.06

[1] Restricted stock units granted and outstanding of 1,171,093 as of March 31, 2021, are excluded from the computation of diluted earnings due to the anti-dilutive effect as a result of the Company's net loss for the three months ended March 31, 2021.

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Note 4 - Inventories - Inventories (Details) - USD ($) $ in Thousands	Mar. 31, 2021	Dec. 31, 2020
Raw materials	$ 25,406	$ 14,586
Work-in-process	14,272	12,634
Finished goods	2,843	2,704
Inventory, Gross, Total	42,521	29,924
Less: Reserve for excess and obsolete inventory	(2,245)	(3,200)
Net inventories	$ 40,276	$ 26,724

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Note 5 - Intangible Assets (Details Textual)	3 Months Ended	12 Months Ended
	Mar. 31, 2021	Dec. 31, 2020
Finite-Lived Intangible Assets, Remaining Amortization Period (Year)	4 years 146 days	4 years 219 days
Minimum [Member]
Finite-Lived Intangible Assets, Remaining Amortization Period (Year)	2 years
Maximum [Member]
Finite-Lived Intangible Assets, Remaining Amortization Period (Year)	7 years

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Note 5 - Intangible Assets - Intangible Assets (Details) - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2021	Dec. 31, 2020
Cost Basis	$ 25,248	$ 25,248
Accumulated Amortization	(13,653)	(13,470)
Accumulated Impairment Charges	(7,592)	(7,592)
Intangible assets, net	$ 4,003	$ 4,186
Remaining Average Amortization Period (Year)	4 years 146 days	4 years 219 days
Noncompete Agreements [Member]
Cost Basis	$ 170	$ 170
Accumulated Amortization	(118)	(111)
Accumulated Impairment Charges
Intangible assets, net	$ 52	$ 59
Remaining Average Amortization Period (Year)	1 year 292 days	2 years 36 days
Customer Relationships [Member]
Cost Basis	$ 15,979	$ 15,979
Accumulated Amortization	(7,055)	(6,979)
Accumulated Impairment Charges	(7,592)	(7,592)
Intangible assets, net	$ 1,332	$ 1,408
Remaining Average Amortization Period (Year)	4 years 255 days	4 years 328 days
Trade Names [Member]
Cost Basis	$ 9,099	$ 9,099
Accumulated Amortization	(6,480)	(6,380)
Accumulated Impairment Charges
Intangible assets, net	$ 2,619	$ 2,719
Remaining Average Amortization Period (Year)	6 years 182 days	6 years 292 days

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Note 5 - Intangible Assets - Estimated Future Amortization Expense (Details) - USD ($) $ in Thousands	Mar. 31, 2021	Dec. 31, 2020
2021	$ 550
2022	725
2023	664
2024	661
2025	661
2026 and thereafter	742
Total	$ 4,003	$ 4,186

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Note 6 - Accrued Liabilities - Accrued Liabilities (Details) - USD ($) $ in Thousands	Mar. 31, 2021	Dec. 31, 2020
Accrued payroll and benefits	$ 5,296	$ 5,320
Fair value of interest rate swap	118	148
Accrued property taxes	186
Income taxes payable	115	78
Accrued professional fees	505	176
Accrued warranty liability	40	33
Self-insured workers compensation reserve	140	74
Accrued other	331	478
Total accrued liabilities	$ 6,731	$ 6,307

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Note 7 - Debt and Credit Agreements (Details Textual) - USD ($) $ in Thousands						3 Months Ended		12 Months Ended
	Oct. 29, 2020	May 13, 2020	Apr. 15, 2020	Feb. 25, 2019	Oct. 26, 2016	Mar. 31, 2021	Mar. 31, 2020	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018	Jun. 30, 2019	Dec. 31, 2016
Long-term Debt, Total						$ 228		$ 228
Long-term Debt, Current Maturities, Total						5,076		1,406
Proceeds from Issuance of Other Long-term Debt						595
Repayments of Other Long-term Debt						150	$ 242
Development Corporation of Abilene Loan [Member]
Long-term Debt, Total								228				$ 570
Debt Instrument, Decrease, Forgiveness								114	$ 114	$ 114
Notes Payable, Other Payables [Member]
Long-term Debt, Total						609		163
Long-term Debt, Current Maturities, Total						$ 609		161
Debt Instrument, Interest Rate, Stated Percentage						5.00%
Paycheck Protection Program CARES Act [Member]
Long-term Debt, Total						$ 9,151		$ 9,151
Proceeds from Issuance of Other Long-term Debt			$ 9,530
Repayments of Other Long-term Debt		$ 379
Interest Rate Swap [Member]
Derivative Liability, Notional Amount											$ 6,000
Derivative, Fixed Interest Rate											2.13%
Minimum [Member] | Notes Payable, Other Payables [Member]
Debt Instrument, Periodic Payment, Total						1
Maximum [Member] | Notes Payable, Other Payables [Member]
Debt Instrument, Periodic Payment, Total						36
Revolving Credit Facility [Member]
Debt Instrument, Term (Year)					3 years
Long Term Debt Extended Term (Year)				3 years
Line of Credit Facility, Maximum Borrowing Capacity				$ 35,000
Line of Credit Facility Borrowing Restriction Percentage of Receivables				85.00%
Line of Credit Facility Borrowing Restriction Percentage of Inventories				50.00%
Line of Credit Facility Borrowing Restriction Percentage of Orderly Liquidation Value of Inventories				85.00%
Line of Credit Facility Borrowing Minimum Restriction Value				$ 12,500
Line of Credit Facility Borrowing Restriction Percentage of Orderly Liquidation Value of Machinery and Equipment				75.00%
Line of Credit Facility Borrowing Restriction Percentage of Mortgaged Property				50.00%
Line of Credit Facility Borrowing Restriction Value				$ 12,000
Line of Credit Facility, Unused Capacity, Commitment Fee Percentage				0.50%
Long-term Line of Credit, Total						4,468
Line of Credit Facility, Remaining Borrowing Capacity						$ 18,640
Letter of Credit [Member]
Line of Credit Facility, Maximum Borrowing Capacity				$ 10,000
Letter of Credit [Member] | London Interbank Offered Rate (LIBOR) [Member] | Minimum [Member]
Debt Instrument, Basis Spread on Variable Rate	2.25%
Letter of Credit [Member] | London Interbank Offered Rate (LIBOR) [Member] | Maximum [Member]
Debt Instrument, Basis Spread on Variable Rate	2.75%
Letter of Credit [Member] | Base Rate [Member] | Minimum [Member]
Debt Instrument, Basis Spread on Variable Rate	0.00%
Letter of Credit [Member] | Base Rate [Member] | Maximum [Member]
Debt Instrument, Basis Spread on Variable Rate	0.75%

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Note 7 - Debt and Credit Agreements - Outstanding Debt Balances (Details) - USD ($) $ in Thousands	Mar. 31, 2021	Dec. 31, 2020
Long-term Debt, Total	$ 228	$ 228
Less: Current portion	(5,076)	(1,406)
Long-term Debt, Excluding Current Maturities, Total	9,380	9,381
Line of Credit [Member]
Long-term Debt, Total	4,468	1,245
Paycheck Protection Program CARES Act [Member]
Long-term Debt, Total	9,151	9,151
Long-term Debt, Excluding Current Maturities, Total	9,151
Notes Payable, Other Payables [Member]
Long-term Debt, Total	609	163
Less: Current portion	$ (609)	$ (161)

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Note 8 - Leases (Details Textual) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020	Dec. 31, 2020	Jan. 01, 2019
Operating Lease, Liability, Total	$ 21,491			$ 19,508
Operating Lease, Right-of-Use Asset	19,401		$ 19,321	$ 17,613
Right-of-Use Asset Obtained in Exchange for Operating Lease Liability	907	$ 4,380
Right-of-Use Asset Obtained in Exchange for Finance Lease Liability	$ 263

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Note 8 - Leases - Leases Information (Details) - USD ($) $ in Thousands		3 Months Ended
		Mar. 31, 2021	Mar. 31, 2020
Amortization of finance lease assets		$ 186	$ 129
Interest on finance lease liabilities		68	26
Total finance lease costs		254	155
Operating lease cost		759	765
Short-term lease cost		196	132
Variable lease cost	[1]	230	195
Sublease income		(46)	(45)
Total operating lease costs		1,139	1,047
Total lease cost		1,393	1,202
Operating cash outflow from operating leases		$ 887	$ 888
Weighted-average remaining lease term-finance leases at end of period (in years) (Year)		1 year 328 days	1 year 73 days
Weighted-average remaining lease term-operating leases at end of period (in years) (Year)		9 years 182 days	10 years 182 days
Weighted-average discount rate-finance leases at end of period		9.00%	9.20%
Weighted-average discount rate-operating leases at end of period		8.50%	8.80%

[1] Variable lease costs consist primarily of taxes, insurance, utilities, and common area or other maintenance costs for the Company's leased facilities and equipment.

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Note 8 - Leases - Future Minimum Lease Payments (Details) - USD ($) $ in Thousands	Mar. 31, 2021	Dec. 31, 2020	Jan. 01, 2019
2021, finance leases	$ 1,317
2021, operating leases	2,668
2021, total	3,985
2022, finance leases	1,400
2022, operating leases	3,474
2022, total	4,874
2023, finance leases	732
2023, operating leases	3,388
2023, total	4,120
2024, finance leases	151
2024, operating leases	2,933
2024, total	3,084
2025, finance leases	84
2025, operating leases	3,015
2025, total	3,099
2026 and thereafter, finance leases
2026 and thereafter, operating leases	17,103
2026 and thereafter, total	17,103
Total lease payments, finance leases	3,684
Total lease payments, operating leases	32,581
Total lease payments, total	36,265
Less—portion representing interest, finance leases	(337)
Less—portion representing interest, operating leases	(11,090)
Less—portion representing interest, total	(11,427)
Present value of lease obligations, finance leases	3,347
Present value of lease obligations, operating leases	21,491		$ 19,508
Present value of lease obligations, total	24,838
Less—current portion of lease obligations, finance leases	(1,456)	$ (1,427)
Less—current portion of lease obligations, operating leases	(1,743)	(1,832)
Less—current portion of lease obligations, total	(3,199)
Long-term portion of lease obligations, finance leases	1,891	1,996
Long-term portion of lease obligations, operating leases	19,748	$ 19,569
Long-term portion of lease obligations, total	$ 21,639

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Note 9 - Fair Value Measurements - Fair Value of Financial Liabilities (Details) - USD ($) $ in Thousands	Mar. 31, 2021	Dec. 31, 2020
Interest rate swap	$ 118	$ 148
Fair Value, Recurring [Member]
Total liabilities at fair value	118	148
Fair Value, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]
Total liabilities at fair value
Fair Value, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Total liabilities at fair value	118	148
Fair Value, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
Total liabilities at fair value
Fair Value, Recurring [Member] | Interest Rate Swap [Member]
Interest rate swap	118	148
Fair Value, Recurring [Member] | Interest Rate Swap [Member] | Fair Value, Inputs, Level 1 [Member]
Interest rate swap
Fair Value, Recurring [Member] | Interest Rate Swap [Member] | Fair Value, Inputs, Level 2 [Member]
Interest rate swap	118	148
Fair Value, Recurring [Member] | Interest Rate Swap [Member] | Fair Value, Inputs, Level 3 [Member]
Interest rate swap

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Note 10 - Income Taxes (Details Textual) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020	Dec. 31, 2020
Income Tax Expense (Benefit), Total	$ 32	$ 52
Operating Loss Carryforwards, Total			$ 260,598
Operating Loss Carryforwards, Subject to Expiration			$ 227,781
Operating Loss Carry Forwards Annual Limit	14,284
Unrecognized Tax Benefits, Ending Balance	0
Unrecognized Tax Benefits, Income Tax Penalties and Interest Accrued, Total	$ 0
Rights [Member]
Term of Extended Rights Plan (Year)	3 years
Threshold Percentage of Beneficial Ownership for Significant Dilution in Ownership Interest	4.90%
Class of Warrant or Right Number of Rights Per Common Stock Share	1
Class of Warrant or Right, Number of Securities Called by Each Warrant or Right (in shares)	0.001
Class of Warrant or Right, Exercise Price of Warrants or Rights (in dollars per share)	$ 4.25
Class of Warrant or Right Current Beneficial Ownership Percentage That Will Not Trigger Preferred Share Purchase Rights	4.90%

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Note 11 - Share-based Compensation (Details Textual) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number, Ending Balance (in shares)	0
Share-based Payment Arrangement, Shares Withheld for Tax Withholding Obligation (in shares)	105,399
Payment, Tax Withholding, Share-based Payment Arrangement	$ 847

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Note 11 - Share-based Compensation - Restricted Stock Unit and Performance Award Activity (Details)	3 Months Ended
	Mar. 31, 2021 $ / shares shares
Unvested, number of shares (in shares) | shares	1,332,884
Unvested, weighted average grant-date fair value per share (in dollars per share) | $ / shares	$ 1.86
Granted, number of shares (in shares) | shares	80,014
Granted, weighted average grant-date fair value per share (in dollars per share) | $ / shares	$ 2.06
Vested, number of shares (in shares) | shares	(241,805)
Vested, weighted average grant-date fair value per share (in dollars per share) | $ / shares	$ 2.14
Unvested, number of shares (in shares) | shares	1,171,093
Unvested, weighted average grant-date fair value per share (in dollars per share) | $ / shares	$ 1.84

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Note 11 - Share-based Compensation - Share-based Compensation Expense (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Share-based compensation expense	$ 219	$ 308
Basic earnings per share (in dollars per share)	$ 0.01	$ 0.02
Diluted earnings per share (in dollars per share)	$ 0.01	$ 0.02
Cost of Sales [Member]
Share-based compensation expense	$ 26	$ 22
Selling, General and Administrative Expenses [Member]
Share-based compensation expense	$ 193	$ 286

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Note 14 - Segment Reporting (Details Textual) - Heavy Fabrications [Member]	3 Months Ended
	Mar. 31, 2021
Number of Facilities	2
Number of Tower Sections in Production Capacity of Turbines Total	1,650
Maximum [Member]
Annual Tower Production Capacity	550
Minimum [Member]
Power Generating Capacity of Turbines	1,100

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Note 14 - Segment Reporting - Segment Reporting (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020	Dec. 31, 2020
Revenues from external customers	$ 32,728	$ 48,634
Revenue from Contract with Customer, Including Assessed Tax	32,728	48,634
Operating loss	(4,311)	1,680
Depreciation and amortization	1,553	1,612
Capital expenditures	612	670
Total assets	134,221		$ 119,682
Consolidation, Eliminations [Member]
Revenues from external customers
Revenue from Contract with Customer, Including Assessed Tax	(2)
Operating loss
Depreciation and amortization
Capital expenditures
Total assets	(200,762)		(194,747)
Intersegment Eliminations [Member]
Revenue from Contract with Customer, Including Assessed Tax
Heavy Fabrications [Member]
Operating loss	(1,700)
Heavy Fabrications [Member] | Operating Segments [Member]
Revenues from external customers	22,777	38,368
Revenue from Contract with Customer, Including Assessed Tax	22,777	38,368
Operating loss		3,541
Depreciation and amortization	945	963
Capital expenditures	563	381
Total assets	55,689		40,438
Heavy Fabrications [Member] | Intersegment Eliminations [Member]
Revenue from Contract with Customer, Including Assessed Tax
Gearing [Member]
Operating loss	(989)
Gearing [Member] | Operating Segments [Member]
Revenues from external customers	5,349	6,227
Revenue from Contract with Customer, Including Assessed Tax	5,349	6,227
Operating loss		(261)
Depreciation and amortization	458	512
Capital expenditures		168
Total assets	43,181		43,319
Gearing [Member] | Intersegment Eliminations [Member]
Revenue from Contract with Customer, Including Assessed Tax
Industrial Solutions [Member]
Operating loss	(14)
Industrial Solutions [Member] | Operating Segments [Member]
Revenues from external customers	4,602	4,039
Revenue from Contract with Customer, Including Assessed Tax	4,604	4,039
Operating loss		192
Depreciation and amortization	106	104
Capital expenditures	20	120
Total assets	8,222		10,244
Industrial Solutions [Member] | Intersegment Eliminations [Member]
Revenue from Contract with Customer, Including Assessed Tax	2
Corporate Segment [Member]
Operating loss	(1,608)
Corporate Segment [Member] | Operating Segments [Member]
Revenues from external customers
Revenue from Contract with Customer, Including Assessed Tax
Operating loss		(1,792)
Depreciation and amortization	44	33
Capital expenditures	29	$ 1
Total assets	227,891		$ 220,428
Corporate Segment [Member] | Intersegment Eliminations [Member]
Revenue from Contract with Customer, Including Assessed Tax

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Note 15 - Commitments and Contingencies - Allowance of Doubtful Accounts (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Balance at beginning of period	$ 473	$ 127
Bad debt expense	5	55
Write-offs	(222)	(19)
Other adjustments	(1)	(7)
Balance at end of period	$ 255	$ 156